Qantas Airways has announced a new scheme for frequent flyers to upgrade to business class seats (Freed, 2015). Under the previous system, passengers with a specified amount of frequent flyer points were allowed to upgrade to available business class seats. Now selected frequent flyers can also bid a mix of frequent flyer points and cash for upgrades. A minimum dollar amount of cash will be required, and Qantas will give guidelines on the likelihood that a proposed bid will be successful. [3 marks]

a) Could Qantas' new scheme be considered as an auction?

b) Why would Qantas believe that its profits will be increased by the new scheme?

c) Why would Qantas give a guide to whether the cash bid made by a passenger for an upgrade will be successful?