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Air Fares 101 – Why do fares change all the time?

161 points by ZeljkoS 12y ago

coldcode 12y ago
Good overview. Having worked at a GDS subsidiary and written about this topic, another thing to add is it depends on how many caches there are between you and the root database. Airfares are heavily cached so the data that is shown in search results is often stale; only the final booking (when you actually pay) is the real number. The more contention for seats as you get to the last few the more likely the final price can jump. For example, Google's flight data is very stale since they don't do any booking, they don't really have to update all that frequently, which means they can return results from their own cache fast.
- giarc 12y ago
  Great explanation, however why do I never see "Your fare has increased $55" on sites like Expedia but sites like CheapAir.com have it all the time. I expect Expedia and CheapAir.com have the same source of data therefore it does seem like a bait and switch situation.
  - coldcode 12y ago
    Expedia may decide to eat the difference (it can go up and down) and other folks may not be able to afford this (remember that airlines only give like $10 per ticket, not much margin).
michaelochurch 12y ago
"We did that Uber shit before it was cool." -- The airlines. Another thing that surprises most people is how expensive business and first class are, relative to coach. After all, if you're only getting 1.5-2x as much space, it doesn't seem fair that you'd have to pay 10x prices. The truth is that many of those seats are filled via upgrades to frequent fliers and more fairly priced in that view. But someone who asks for an assured first-class seat (which is where the 5-10x premium is charged) is identifying himself as a captive buyer. About half of the first-class seats are upgrades (especially to make room, because airlines often overbook) given that day, and those are cheap or free, but the other half are a mix of business travelers under time pressure, invited conference speakers whose flights are booked by a third-party, and people with disabilities. While people complain about the "assholes" in first class getting marginally better treatment, a surprising percentage of the people up there aren't rich at all, but have disabilities (e.g. back and knee problems) and can't fly coach, and those people fly once a year (!!) at most, because they can barely afford it. Perversely, the disabled guy of modest means is going to see a higher fare for a first-class seat than a business traveler on a corporate rate. Oddly enough, air travel is getting to the point where airlines are intentionally making coach travel worse to make up for a decline of first- and business-class passengers since 2008. While one might think that the purpose of the checked bag fees is to make a little extra money (and that's part of it) there's a much larger gain in filling up the overhead bins (thanks to those horrid checked-bag fees, overhead bins always fill up early) and then selling early boarding for $50 per ticket. Waiting spaces at many terminals have been deliberately neglected for acoustics and outlets, to push people into buying first-class tickets just to have access to the lounges. Natural demand for first class seats hasn't recovered since 2007 and, even with the economy back, it won't, so air travel is now an experience where unpleasantness is deliberately induced.
- johnlabaptise 12y ago
  "if you're only getting 1.5-2x as much space, it doesn't seem fair that you'd have to pay 10x prices" Business aren't obligated to offer you prices that you think are fair. I don't understand why people think they are. When people say something is a rip-off or unfairly priced what they really mean is that they aren't willing to pay that price for the product. What a business chooses to charge you is entirely up to them, and they can be as rational or irrational in your eyes as they like.
  - michaelochurch 12y ago
    I don't think that it's dynamic pricing that makes people hate the airlines. It's the rash of bad-faith activity around the dynamic pricing. For example, decreasing legroom and forcing disabled people into business class tickets they wouldn't have needed, were it 20 years ago when coach seats had enough room, is bad-faith activity. Likewise, this "boarding group" nonsense where "Group 5" means you'll have no overhead space and have to wait at a fucking baggage claim, despite carrying your bags to the terminal, is bad-faith activity. So is (in Asia) denying airport lounge access to coach passengers instead of pricing it a la carte as is done in the US, and so is the non-transferability of tickets (which is disingenuously argued to be because of 9/11, but really is just there to steal from people). There's a ton that airlines do that is dishonest, in bad faith, and generally engineered to make for an unpleasant experience in coach, just to make up for the continuing decline in demand for first-class travel due to (a) teleconferencing in business, and (b) better medications for sleep and relaxation (e.g. modern benzodiazepines). If you want to charge some narcissistic business executive 10x for 50% more room, go ahead. But that's not what we're talking about.
    - icebraining 12y ago
      For example, decreasing legroom and forcing disabled people into business class tickets they wouldn't have needed, were it 20 years ago when coach seats had enough room, is bad-faith activity. How are coach ticket prices now compared to 20 years ago? It's not bad faith if it's a way of decreasing prices (by packing more people) for most clients.
rspeer 12y ago
I was hoping for something that explained the part where they get you to pay a higher fare by tracking you on the Web. But maybe an insider site like this wouldn't be willing to talk about that. There are many sites that describe this happening, such as [1]. And I've seen it happen to me: a fare would go up by $50 while I was searching, and opening a private browsing window would make it go back down. [1] http://www.halfwayanywhere.com/budget-travel/your-guide-to-cheaper-flights/ http://www.halfwayanywhere.com/budget-travel/your-guide-to-c...
- tiku 12y ago
  The all inclusive branch also does this, you search a nice holiday, get hyped, tell your family or mates, and when you get back a day later it's suddenly 200 euro's more..
- useful 12y ago
  I've only worked a little with the inventory back end so you can take what I say with a grain of salt. Different points of sale can have different yields and report different available seats in each class of service. So the price for a travel agent or a partner airline can be different. If a website detects you are searching for a holiday flight, and are back, they could switch the point of sale that they give you quotes from.
- manacit 12y ago
  I don't mean to sound standoffish, but as far as I know this isn't true. I have yet to see real proof that airline companies get you to pay a higher fare by tracking your searches/browsing. While I'm sure you saw a $50 difference, it was likely a slightly different search, which is almost always what happens when people claim they've noticed this. About a year ago, someone on reddit went out and offered a year of reddit gold for anyone that could, there was nobody: https://www.reddit.com/r/LifeProTips/comments/1ekv6e/lpt_bounty_1_year_of_reddit_gold_to_the_first https://www.reddit.com/r/LifeProTips/comments/1ekv6e/lpt_bou... As recently as last week, someone claimed they had reproduced, but they used slightly different search params and ended up with something totally different: http://www.reddit.com/r/travel/comments/2okml5/for_anyone_planning_travel_who_doesnt_use/ http://www.reddit.com/r/travel/comments/2okml5/for_anyone_pl... This myth is rife with anecdotal proof, but I've yet to see anything concrete.
igrekel 12y ago
Maybe to point out that the number of seats in a fare bucket doesn't need to change at any second for the displayed fare to change. For most airlines, the fare buckets are not independent and bookings in one bucket may decrease availability from other buckets. These formulas make it unnecessary to change the number of seats allocated to each bucket all the time. Most changes you see during the day are just the result of new bookings and cancellations that are coming in live. The volume of pre departure cancellations can be crazy for some routes to a point people wouldn't even believe.
DanielBMarkham 12y ago
In the states, the more I deal with cellular companies and airlines, the more I hate them. It's not just me: it's a common opinion. One prominent business magazine had a cover a few years back titled something like "The companies we all hate" Consumers like to purchase things in atomic units and simple terms. If I go to the grocery store, there's a bushel of apples. The sign says "Granny Smith apples: $1" I can confidently pick up an apple, walk to the register, and expect to pay a dollar. The grocery store can advertise their wares and prices in the paper or online and I can plan on going to the store and making the same exchange. People like being able to predict how much of one thing they have to trade for an amount of something else. When lots of competitors do this in a market that anybody can participate in, it's good for everybody. But when I buy an airline ticket? The rules are many times so byzantine that entire cottage industries have sprung up in an effort to capitalize on them. How much does it cost to fly coast-to-coast? Beats the heck out of me. There is no answer. Could I pick up a job where I had to fly ten times from point A to point B with a few day's notice and be able to include travel costs in the price? No, not unless I were to charge up to 17 times the cheapest rate. Complex pricing systems may be great for the airline, but they're damaging to the free and open market. Instead of using rapidly-changing yield management systems, we'd all be better off if they just used an cross-carrier auction with transferable tickets. Let downstream providers handle liquidity. I doubt this will happen, and instead there will be more penny-pinching, crazy rates, and unhappy customers.
- markdown 12y ago
  This doesn't take away from your point at all, but I just wanted to point out that: > I can confidently pick up an apple, walk to the register, and expect to pay a dollar. This is true in most of the world, but not in the US, where you don't know what you're paying until you reach the checkout counter.
  - thaumasiotes 12y ago
    Well, you can weigh the apple yourself on the scales that occur all throughout the produce section... but yeah, I'd be surprised to see a flat rate for fruit by species no matter the size. Fruit is sold by weight, not count, in China too.
tchvil 12y ago
cheapair.com could keep the various fares for a flight and show you their progression
jexe 12y ago
So has anyone built a site that lets you put limit orders on airline seats yet? I'd love to, say, have something automatically book a $250 flight across the country if the price happens to cross that threshold in the next week.
- giarc 12y ago
  yapta.com doesn't allow booking but it does allow you to set alerts on specific flights.
- rbcgerard 12y ago
  I think that's a pretty good idea - two quick thoughts: 1.as a consumer its hard to do more than "technical analysis" on a chart of the ticket price to figure out where to set your limit order 2. What are the odds that the company doing this doesn't share their order book with the airlines? still like the idea
  - eru 12y ago
    > 1.as a consumer its hard to do more than "technical analysis" on a chart of the ticket price to figure out where to set your limit order You don't do any analysis on the price. You just introspect, and figure out what is cheap enough to make you get up and fly, and that's the price you set.
- jgroszko 12y ago
  Kayak.com allows you to set email alerts for this
- geverett 12y ago
  We've been considering doing that at hitlistapp.com. For now, we just send you alerts when we find deals that we've determined are good (or great or spectacular), based on a proprietary algorithm for determining good deals that takes into account time to booking, price fluctuations throughout the year, and how desirable the destination is for you. We're different from Kayak or Yapta alerts in that you don't have to set alerts for a specific destination/time - you can search for things for, say, '7-10 day trips to South America between January 4th and 30th' or 'a long weekend in Austin in the next quarter'.
Someone1234 12y ago
One additional note: While airfares do get progressively more expensive (on average) as you get closer to your flight, if you book too far out you will actually pay MORE. A lot of discount fares don't open until around six months before a flight (approximately), sometimes less. So if you book too far in advanced you'll pay close to a "full fare" (or at least miss out on some of the better discount classes). This, I suspect, is because the airline hasn't yet calculated how many discount classes they'll be opening up, so they just give you a "default"/safe price that they likely won't regret. Just something to keep in mind from someone who often plans travel 6+ months in advanced. Booking flights 3-4 months in advance is fairly safe, longer or shorter and you might suffer for it.
zrail 12y ago
Southwest, as far as I can tell, doesn't change rates once they've published. Three rate tiers, optional early check-in to get a better boarding order position, and free baggage. The most striking difference is that, in general, the flight attendants are happy. They smile. They joke around. Sometimes they sing songs. I was on a flight a few months ago where the entire plane played a game because it was someone's birthday. If Southwest flies anywhere close to where I'm going, I make a point to fly with them. Even if they're slightly more expensive, the drastically less toxic experience makes up for it.
- Someone1234 12y ago
  I too very much enjoy Southwest. Seems like people either love them or hate them (mostly because a lot of people want assured seat locations rather than the "bus model" Southwest utilises).
- earlz 12y ago
  I'm not 100% sure it is "legal", but I had the pleasure of flying on southwest with them half-singing half-joking throughout the mandatory safety stuff.. it was a pretty hilarious change of pace. Unfortunately, Southwest, though fairly cheap for where I go, has 2 stops minimum no matter what where as everywhere else can make it 1 stop
  - Chronic29 12y ago
    It must be the flight attendant's first week on they job. Once they realize the mundane life ahead, they'll serious up.
  - Fuzzwah 12y ago
    Had a similar experience on Southwest when flying from Phoenix to Vegas. I initially cringed as the attendant started talking on the the mic and making a joke, as any world weary traveler probably would. I soon found myself laughing as the rest of the crew joined in with mimes and singing and call backs. It was definitely one of the best flight experiences I've ever had.
unfamiliar 12y ago
Corollary: this implies that booking flights which are the cheapest/most inconvenient will likely end you up in a less populated plane. Double win! This is another reason to be wary of ubiquitous tracking for marketing purposes. Say I want to fly from Kent to New York via London. I book my expensive transatlantic flight and once that is secured, book my domestic flight. But if Big Data is watching my actions, what is to stop the airline hiking the price of the domestic flight as soon as they see me booking the transatlantic flight? At that point I am committed and will be forced to pay much more than I had planned for the domestic flight.
- blackRust 12y ago
  > But if Big Data is watching my actions... Switch the order in which you book the flights. Since we assume separate bookings and sequential booking order this puts lower risk into your first purchase, and also Big Data then has all transatlantic flights from London to choose from to hike your price.
  - Istof 12y ago
    or use 2 browsers to load the 2 prices at the same time
alexivanovs 12y ago
This is a great piece, definitely, but the question I have, do you - Americans - consider $500 a fair/reasonable amount of money to pay for a plane ticket? (I even had to lookup the average salary in the USA) I'm from Europe myself, and it usually costs us anywhere from $40 to $150 to travel anywhere in Europe, though the prices do go up if you want to go to a place such as China, Thailand, or even India. But then again, that's Asia!
- ovulator 12y ago
  The US is much more spread out than Europe, much more. A flight between the major cities in Europe, say London to Paris will be maybe $100 one way. A similar trip (distance wise) in the US from New York to Boston would also be $100 one way. A lot of people in the US fly much further than that. A trip from New York to Phoenix Arizona (not even all the way across the country) is a similar distance to Lisbon to Helsinki and will probably cost about $400 for a round trip flight in the US, there and back again.
- selectout 12y ago
  From my own experience (from MidWest, live in SF now), $500 is pretty average for a cross country. I can get most places I want to go (any major US City not completely across country) for about $150-$300 though and these are all round trips. It's just when I go from SF <-> NYC/Boston/DC that I get the $500-$700 range. Or if I just book at horrible times or over holidays.
- potatolicious 12y ago
  $500 is pretty normal for cross-country flying. Keep in mind that the USA is gigantic - JFK-LAX is approximately the same distance as Frankfurt to Tehran. Prices are much lower for closer distances - it's not at all unusual to be able pick up ~$150 round trips for shorter routes.
- mikeash 12y ago
  What's "a plane ticket"? I live near Washington, DC. If I fly to, say, New York, then $500 would be outrageous. I'd expect to pay $100-200 roundtrip for that, depending. It's about an hour's flight. If I fly to Miami, I'd expect to pay $200-300. That's about two hours. If I fly to San Francisco, then $500 becomes a reasonable price. That's a six hour flight. It makes no sense to talk about "a plane ticket" in isolation. From where to where? How far?
geverett 12y ago
I've always thought it was ridiculous that people would go to a site like Expedia or Kayak, type in a date and destination, and just hope that they get the cheapest fare. As this article explains so well, prices are fluctuating constantly and the chances that you'll be lucky enough to be searching for the flight at the optimal time are close to nil. Most flight search engines now let you set up alerts to track prices, but I also think those aren't ideal because if you're flexible about where or when you might travel you'd have to set up thousands of alerts. (example: I'd like to go somewhere warm for a weekend in January from New York. There are 113 warm weather destinations within 4 hours of New York; I can leave on Friday or Saturday and return on Sunday or Monday; there are four weekends in January = 1808 alerts to set!). This is exactly why we built Hitlist (hitlistapp.com, available for iOS and Android), an app which monitors airfares across swathes of destinations and dates and sends you notifications when there are ridiculous fares. Some of you might find it useful!
- solutionyogi 12y ago
  This is a great idea. Two questions: 1. Why is it an App and not a website? 2. As you noted in your other comment, it would be best if you can have my credit card on file and buy tickets on my behalf automatically.
  - geverett 12y ago
    1. We want to be both (and have a website coming soon!) but started with app because it's so important to get these notifications on the go and ideally be able to book immediately. and 2. we're working on it! You can keep track of where we are if you have any interest by subscribing at blog.hitlistapp.com.
- Bahamut 12y ago
  I like going to airline price search sites for the simplicity - camping various sites for cheaper prices takes time and effort.
- phantom784 12y ago
  Just installed it. Is there a way to set multiple home airports? There's a bunch of airports near me that I'd drive to if a good flight were available.
saosebastiao 12y ago
There is a big problem with trying to game the system with the airlines: The pricing is done using control theory. In fact, they have the most mature application of control theory to pricing out there, probably by virtue of being to first to apply it in that way. Practically, that means that you can only game the system if nobody else knows how. If you are the only one that knows how, the algorithms probably can't detect and compensate for the error. As soon as news breaks out, the algorithm starts compensating. We saw this about 10 years ago when there were a few companies that started promoting the ability to search for Y-class fares...it was all but a year or so before the pricing stabilized. The same problem is currently happening for the hidden-city ticketing trick [1](the algorithms are compensating, although the airlines put in some manual systems when it first broke news). The same goes for these ideas of "the best time to buy". Not only is historical data not good enough, but the more well known the data becomes, the worse the predictions become. This has already happened to some degree with the "buy as early as possible" crowd. Now it is more expensive to buy early than it is to buy late...something that wasn't previously true. The lesson? If you figure out a way to game the system, don't tell anyone else. [1] http://www.wsj.com/articles/SB10001424127887323539804578259740155116054 http://www.wsj.com/articles/SB100014241278873235398045782597...
- Chronic29 12y ago
  tl;dr: once it's public information, the "market" adjusts
- gghh 12y ago
  The article mentions "yield management" as the analytical background behind airfares http://en.wikipedia.org/wiki/Yield_management http://en.wikipedia.org/wiki/Yield_management Do you know of any referential book/article/blog to learn this kind of things?
- naraghi 12y ago
  I'm really interested in how these ways to game the system spread throughout a given market. I've referred to it as the "psychology of markets" and heard it called "behavioral economics." Could you recommend any other sources to read more?
- 12y ago
lifeisstillgood 12y ago
I think the absolute dynamic pricing is what annoys me - it's like an inverse Lake Woebegone effect - simply everyone who gets on a plane assumes that they overpaid. I suspect there is somewhere in the behavioural economics literature a pricing mechanism that has many benefits of dynamic pricing but allows the buyer to feel I control - they know the complete range of fares and the complete range of prices and so feel able to buy without the fear if missin out.
Throwaway1224 12y ago
Here's the theory behind the price changes: http://en.wikipedia.org/wiki/Revenue_management http://en.wikipedia.org/wiki/Revenue_management
ExpertFlyer 12y ago
What no one is telling you is that the actual published fare tariffs don't change that often. What does change and is dynamically managed by the airlines revenue management departments is the availability of different fare classes that the tariffs book into. It's the combination of fares and fare class availability that determine the current fares available for a flight (and not just the lowest fare). On ExpertFlyer, we show all of this hidden raw information that normally only travel agents have been able to see as we buy the data from the airline reservation systems. The first few pages of our education guide give a simple overview of how this works: http://www.expertflyer.com/edu-guide.pdf http://www.expertflyer.com/edu-guide.pdf
- oostevo 12y ago
  In case it helps: I've been a subscriber for several years, and this is the first I've seen the Education Guide. It might just be because I'm oblivious, but perhaps you might want to make it more prominent on the "New to ExpertFlyer" page? I've learned everything in there by osmosis at this point, but the strategies would have been a cool thing to know when I was getting started.
pbreit 12y ago
An article like this needs to at least mention that the relatively unsophisticated pricing approach by Southwest has led it to generally outperform the rest of its competition for decades (I know, staying out of bankruptcy is not a very high bar).
- coldcode 12y ago
  Since their fares are not comparable since they don't let anyone show theirs in the same list as other airlines, you really cannot know if they are cheaper or not. In reality this means they are able to set their prices on average higher than those who have to compete in a list. Better control vs. more exposure.
- sib 12y ago
  Much of Southwest's profitability actually comes from doing a great job hedging against fuel cost changes, rather than making extraordinary margins on the seats.

161 points by ZeljkoS 12y ago

Good overview. Having worked at a GDS subsidiary and written about this topic, another thing to add is it depends on how many caches there are between you and the root database. Airfares are heavily cached so the data that is shown in search results is often stale; only the final booking (when you actually pay) is the real number. The more contention for seats as you get to the last few the more likely the final price can jump. For example, Google's flight data is very stale since they don't do any booking, they don't really have to update all that frequently, which means they can return results from their own cache fast.

giarc 12y ago
Great explanation, however why do I never see "Your fare has increased $55" on sites like Expedia but sites like CheapAir.com have it all the time. I expect Expedia and CheapAir.com have the same source of data therefore it does seem like a bait and switch situation.
- coldcode 12y ago
  Expedia may decide to eat the difference (it can go up and down) and other folks may not be able to afford this (remember that airlines only give like $10 per ticket, not much margin).

michaelochurch 12y ago

"We did that Uber shit before it was cool." -- The airlines. Another thing that surprises most people is how expensive business and first class are, relative to coach. After all, if you're only getting 1.5-2x as much space, it doesn't seem fair that you'd have to pay 10x prices. The truth is that many of those seats are filled via upgrades to frequent fliers and more fairly priced in that view. But someone who asks for an assured first-class seat (which is where the 5-10x premium is charged) is identifying himself as a captive buyer. About half of the first-class seats are upgrades (especially to make room, because airlines often overbook) given that day, and those are cheap or free, but the other half are a mix of business travelers under time pressure, invited conference speakers whose flights are booked by a third-party, and people with disabilities. While people complain about the "assholes" in first class getting marginally better treatment, a surprising percentage of the people up there aren't rich at all, but have disabilities (e.g. back and knee problems) and can't fly coach, and those people fly once a year (!!) at most, because they can barely afford it. Perversely, the disabled guy of modest means is going to see a higher fare for a first-class seat than a business traveler on a corporate rate. Oddly enough, air travel is getting to the point where airlines are intentionally making coach travel worse to make up for a decline of first- and business-class passengers since 2008. While one might think that the purpose of the checked bag fees is to make a little extra money (and that's part of it) there's a much larger gain in filling up the overhead bins (thanks to those horrid checked-bag fees, overhead bins always fill up early) and then selling early boarding for $50 per ticket. Waiting spaces at many terminals have been deliberately neglected for acoustics and outlets, to push people into buying first-class tickets just to have access to the lounges. Natural demand for first class seats hasn't recovered since 2007 and, even with the economy back, it won't, so air travel is now an experience where unpleasantness is deliberately induced.

johnlabaptise 12y ago
"if you're only getting 1.5-2x as much space, it doesn't seem fair that you'd have to pay 10x prices" Business aren't obligated to offer you prices that you think are fair. I don't understand why people think they are. When people say something is a rip-off or unfairly priced what they really mean is that they aren't willing to pay that price for the product. What a business chooses to charge you is entirely up to them, and they can be as rational or irrational in your eyes as they like.
- michaelochurch 12y ago
  I don't think that it's dynamic pricing that makes people hate the airlines. It's the rash of bad-faith activity around the dynamic pricing. For example, decreasing legroom and forcing disabled people into business class tickets they wouldn't have needed, were it 20 years ago when coach seats had enough room, is bad-faith activity. Likewise, this "boarding group" nonsense where "Group 5" means you'll have no overhead space and have to wait at a fucking baggage claim, despite carrying your bags to the terminal, is bad-faith activity. So is (in Asia) denying airport lounge access to coach passengers instead of pricing it a la carte as is done in the US, and so is the non-transferability of tickets (which is disingenuously argued to be because of 9/11, but really is just there to steal from people). There's a ton that airlines do that is dishonest, in bad faith, and generally engineered to make for an unpleasant experience in coach, just to make up for the continuing decline in demand for first-class travel due to (a) teleconferencing in business, and (b) better medications for sleep and relaxation (e.g. modern benzodiazepines). If you want to charge some narcissistic business executive 10x for 50% more room, go ahead. But that's not what we're talking about.
  - icebraining 12y ago
    For example, decreasing legroom and forcing disabled people into business class tickets they wouldn't have needed, were it 20 years ago when coach seats had enough room, is bad-faith activity. How are coach ticket prices now compared to 20 years ago? It's not bad faith if it's a way of decreasing prices (by packing more people) for most clients.

rspeer 12y ago

I was hoping for something that explained the part where they get you to pay a higher fare by tracking you on the Web. But maybe an insider site like this wouldn't be willing to talk about that. There are many sites that describe this happening, such as [1]. And I've seen it happen to me: a fare would go up by $50 while I was searching, and opening a private browsing window would make it go back down. [1] http://www.halfwayanywhere.com/budget-travel/your-guide-to-cheaper-flights/ http://www.halfwayanywhere.com/budget-travel/your-guide-to-c...

tiku 12y ago
The all inclusive branch also does this, you search a nice holiday, get hyped, tell your family or mates, and when you get back a day later it's suddenly 200 euro's more..
useful 12y ago
I've only worked a little with the inventory back end so you can take what I say with a grain of salt. Different points of sale can have different yields and report different available seats in each class of service. So the price for a travel agent or a partner airline can be different. If a website detects you are searching for a holiday flight, and are back, they could switch the point of sale that they give you quotes from.
manacit 12y ago
I don't mean to sound standoffish, but as far as I know this isn't true. I have yet to see real proof that airline companies get you to pay a higher fare by tracking your searches/browsing. While I'm sure you saw a $50 difference, it was likely a slightly different search, which is almost always what happens when people claim they've noticed this. About a year ago, someone on reddit went out and offered a year of reddit gold for anyone that could, there was nobody: https://www.reddit.com/r/LifeProTips/comments/1ekv6e/lpt_bounty_1_year_of_reddit_gold_to_the_first https://www.reddit.com/r/LifeProTips/comments/1ekv6e/lpt_bou... As recently as last week, someone claimed they had reproduced, but they used slightly different search params and ended up with something totally different: http://www.reddit.com/r/travel/comments/2okml5/for_anyone_planning_travel_who_doesnt_use/ http://www.reddit.com/r/travel/comments/2okml5/for_anyone_pl... This myth is rife with anecdotal proof, but I've yet to see anything concrete.

igrekel 12y ago

Maybe to point out that the number of seats in a fare bucket doesn't need to change at any second for the displayed fare to change. For most airlines, the fare buckets are not independent and bookings in one bucket may decrease availability from other buckets. These formulas make it unnecessary to change the number of seats allocated to each bucket all the time. Most changes you see during the day are just the result of new bookings and cancellations that are coming in live. The volume of pre departure cancellations can be crazy for some routes to a point people wouldn't even believe.

DanielBMarkham 12y ago

In the states, the more I deal with cellular companies and airlines, the more I hate them. It's not just me: it's a common opinion. One prominent business magazine had a cover a few years back titled something like "The companies we all hate" Consumers like to purchase things in atomic units and simple terms. If I go to the grocery store, there's a bushel of apples. The sign says "Granny Smith apples: $1" I can confidently pick up an apple, walk to the register, and expect to pay a dollar. The grocery store can advertise their wares and prices in the paper or online and I can plan on going to the store and making the same exchange. People like being able to predict how much of one thing they have to trade for an amount of something else. When lots of competitors do this in a market that anybody can participate in, it's good for everybody. But when I buy an airline ticket? The rules are many times so byzantine that entire cottage industries have sprung up in an effort to capitalize on them. How much does it cost to fly coast-to-coast? Beats the heck out of me. There is no answer. Could I pick up a job where I had to fly ten times from point A to point B with a few day's notice and be able to include travel costs in the price? No, not unless I were to charge up to 17 times the cheapest rate. Complex pricing systems may be great for the airline, but they're damaging to the free and open market. Instead of using rapidly-changing yield management systems, we'd all be better off if they just used an cross-carrier auction with transferable tickets. Let downstream providers handle liquidity. I doubt this will happen, and instead there will be more penny-pinching, crazy rates, and unhappy customers.

markdown 12y ago
This doesn't take away from your point at all, but I just wanted to point out that: > I can confidently pick up an apple, walk to the register, and expect to pay a dollar. This is true in most of the world, but not in the US, where you don't know what you're paying until you reach the checkout counter.
- thaumasiotes 12y ago
  Well, you can weigh the apple yourself on the scales that occur all throughout the produce section... but yeah, I'd be surprised to see a flat rate for fruit by species no matter the size. Fruit is sold by weight, not count, in China too.

tchvil 12y ago

cheapair.com could keep the various fares for a flight and show you their progression

jexe 12y ago

So has anyone built a site that lets you put limit orders on airline seats yet? I'd love to, say, have something automatically book a $250 flight across the country if the price happens to cross that threshold in the next week.

giarc 12y ago
yapta.com doesn't allow booking but it does allow you to set alerts on specific flights.
rbcgerard 12y ago
I think that's a pretty good idea - two quick thoughts: 1.as a consumer its hard to do more than "technical analysis" on a chart of the ticket price to figure out where to set your limit order 2. What are the odds that the company doing this doesn't share their order book with the airlines? still like the idea
- eru 12y ago
  > 1.as a consumer its hard to do more than "technical analysis" on a chart of the ticket price to figure out where to set your limit order You don't do any analysis on the price. You just introspect, and figure out what is cheap enough to make you get up and fly, and that's the price you set.
jgroszko 12y ago
Kayak.com allows you to set email alerts for this
geverett 12y ago
We've been considering doing that at hitlistapp.com. For now, we just send you alerts when we find deals that we've determined are good (or great or spectacular), based on a proprietary algorithm for determining good deals that takes into account time to booking, price fluctuations throughout the year, and how desirable the destination is for you. We're different from Kayak or Yapta alerts in that you don't have to set alerts for a specific destination/time - you can search for things for, say, '7-10 day trips to South America between January 4th and 30th' or 'a long weekend in Austin in the next quarter'.

Someone1234 12y ago

One additional note: While airfares do get progressively more expensive (on average) as you get closer to your flight, if you book too far out you will actually pay MORE. A lot of discount fares don't open until around six months before a flight (approximately), sometimes less. So if you book too far in advanced you'll pay close to a "full fare" (or at least miss out on some of the better discount classes). This, I suspect, is because the airline hasn't yet calculated how many discount classes they'll be opening up, so they just give you a "default"/safe price that they likely won't regret. Just something to keep in mind from someone who often plans travel 6+ months in advanced. Booking flights 3-4 months in advance is fairly safe, longer or shorter and you might suffer for it.

zrail 12y ago

Southwest, as far as I can tell, doesn't change rates once they've published. Three rate tiers, optional early check-in to get a better boarding order position, and free baggage. The most striking difference is that, in general, the flight attendants are happy. They smile. They joke around. Sometimes they sing songs. I was on a flight a few months ago where the entire plane played a game because it was someone's birthday. If Southwest flies anywhere close to where I'm going, I make a point to fly with them. Even if they're slightly more expensive, the drastically less toxic experience makes up for it.

Someone1234 12y ago
I too very much enjoy Southwest. Seems like people either love them or hate them (mostly because a lot of people want assured seat locations rather than the "bus model" Southwest utilises).
earlz 12y ago
I'm not 100% sure it is "legal", but I had the pleasure of flying on southwest with them half-singing half-joking throughout the mandatory safety stuff.. it was a pretty hilarious change of pace. Unfortunately, Southwest, though fairly cheap for where I go, has 2 stops minimum no matter what where as everywhere else can make it 1 stop
- Chronic29 12y ago
  It must be the flight attendant's first week on they job. Once they realize the mundane life ahead, they'll serious up.
- Fuzzwah 12y ago
  Had a similar experience on Southwest when flying from Phoenix to Vegas. I initially cringed as the attendant started talking on the the mic and making a joke, as any world weary traveler probably would. I soon found myself laughing as the rest of the crew joined in with mimes and singing and call backs. It was definitely one of the best flight experiences I've ever had.

unfamiliar 12y ago

Corollary: this implies that booking flights which are the cheapest/most inconvenient will likely end you up in a less populated plane. Double win! This is another reason to be wary of ubiquitous tracking for marketing purposes. Say I want to fly from Kent to New York via London. I book my expensive transatlantic flight and once that is secured, book my domestic flight. But if Big Data is watching my actions, what is to stop the airline hiking the price of the domestic flight as soon as they see me booking the transatlantic flight? At that point I am committed and will be forced to pay much more than I had planned for the domestic flight.

blackRust 12y ago
> But if Big Data is watching my actions... Switch the order in which you book the flights. Since we assume separate bookings and sequential booking order this puts lower risk into your first purchase, and also Big Data then has all transatlantic flights from London to choose from to hike your price.
- Istof 12y ago
  or use 2 browsers to load the 2 prices at the same time

alexivanovs 12y ago

This is a great piece, definitely, but the question I have, do you - Americans - consider $500 a fair/reasonable amount of money to pay for a plane ticket? (I even had to lookup the average salary in the USA) I'm from Europe myself, and it usually costs us anywhere from $40 to $150 to travel anywhere in Europe, though the prices do go up if you want to go to a place such as China, Thailand, or even India. But then again, that's Asia!

ovulator 12y ago
The US is much more spread out than Europe, much more. A flight between the major cities in Europe, say London to Paris will be maybe $100 one way. A similar trip (distance wise) in the US from New York to Boston would also be $100 one way. A lot of people in the US fly much further than that. A trip from New York to Phoenix Arizona (not even all the way across the country) is a similar distance to Lisbon to Helsinki and will probably cost about $400 for a round trip flight in the US, there and back again.
selectout 12y ago
From my own experience (from MidWest, live in SF now), $500 is pretty average for a cross country. I can get most places I want to go (any major US City not completely across country) for about $150-$300 though and these are all round trips. It's just when I go from SF <-> NYC/Boston/DC that I get the $500-$700 range. Or if I just book at horrible times or over holidays.
potatolicious 12y ago
$500 is pretty normal for cross-country flying. Keep in mind that the USA is gigantic - JFK-LAX is approximately the same distance as Frankfurt to Tehran. Prices are much lower for closer distances - it's not at all unusual to be able pick up ~$150 round trips for shorter routes.
mikeash 12y ago
What's "a plane ticket"? I live near Washington, DC. If I fly to, say, New York, then $500 would be outrageous. I'd expect to pay $100-200 roundtrip for that, depending. It's about an hour's flight. If I fly to Miami, I'd expect to pay $200-300. That's about two hours. If I fly to San Francisco, then $500 becomes a reasonable price. That's a six hour flight. It makes no sense to talk about "a plane ticket" in isolation. From where to where? How far?

geverett 12y ago

I've always thought it was ridiculous that people would go to a site like Expedia or Kayak, type in a date and destination, and just hope that they get the cheapest fare. As this article explains so well, prices are fluctuating constantly and the chances that you'll be lucky enough to be searching for the flight at the optimal time are close to nil. Most flight search engines now let you set up alerts to track prices, but I also think those aren't ideal because if you're flexible about where or when you might travel you'd have to set up thousands of alerts. (example: I'd like to go somewhere warm for a weekend in January from New York. There are 113 warm weather destinations within 4 hours of New York; I can leave on Friday or Saturday and return on Sunday or Monday; there are four weekends in January = 1808 alerts to set!). This is exactly why we built Hitlist (hitlistapp.com, available for iOS and Android), an app which monitors airfares across swathes of destinations and dates and sends you notifications when there are ridiculous fares. Some of you might find it useful!

solutionyogi 12y ago
This is a great idea. Two questions: 1. Why is it an App and not a website? 2. As you noted in your other comment, it would be best if you can have my credit card on file and buy tickets on my behalf automatically.
- geverett 12y ago
  1. We want to be both (and have a website coming soon!) but started with app because it's so important to get these notifications on the go and ideally be able to book immediately. and 2. we're working on it! You can keep track of where we are if you have any interest by subscribing at blog.hitlistapp.com.
Bahamut 12y ago
I like going to airline price search sites for the simplicity - camping various sites for cheaper prices takes time and effort.
phantom784 12y ago
Just installed it. Is there a way to set multiple home airports? There's a bunch of airports near me that I'd drive to if a good flight were available.

saosebastiao 12y ago

There is a big problem with trying to game the system with the airlines: The pricing is done using control theory. In fact, they have the most mature application of control theory to pricing out there, probably by virtue of being to first to apply it in that way. Practically, that means that you can only game the system if nobody else knows how. If you are the only one that knows how, the algorithms probably can't detect and compensate for the error. As soon as news breaks out, the algorithm starts compensating. We saw this about 10 years ago when there were a few companies that started promoting the ability to search for Y-class fares...it was all but a year or so before the pricing stabilized. The same problem is currently happening for the hidden-city ticketing trick [1](the algorithms are compensating, although the airlines put in some manual systems when it first broke news). The same goes for these ideas of "the best time to buy". Not only is historical data not good enough, but the more well known the data becomes, the worse the predictions become. This has already happened to some degree with the "buy as early as possible" crowd. Now it is more expensive to buy early than it is to buy late...something that wasn't previously true. The lesson? If you figure out a way to game the system, don't tell anyone else. [1] http://www.wsj.com/articles/SB10001424127887323539804578259740155116054 http://www.wsj.com/articles/SB100014241278873235398045782597...

Chronic29 12y ago
tl;dr: once it's public information, the "market" adjusts
gghh 12y ago
The article mentions "yield management" as the analytical background behind airfares http://en.wikipedia.org/wiki/Yield_management http://en.wikipedia.org/wiki/Yield_management Do you know of any referential book/article/blog to learn this kind of things?
naraghi 12y ago
I'm really interested in how these ways to game the system spread throughout a given market. I've referred to it as the "psychology of markets" and heard it called "behavioral economics." Could you recommend any other sources to read more?
12y ago

lifeisstillgood 12y ago

I think the absolute dynamic pricing is what annoys me - it's like an inverse Lake Woebegone effect - simply everyone who gets on a plane assumes that they overpaid. I suspect there is somewhere in the behavioural economics literature a pricing mechanism that has many benefits of dynamic pricing but allows the buyer to feel I control - they know the complete range of fares and the complete range of prices and so feel able to buy without the fear if missin out.

Throwaway1224 12y ago

Here's the theory behind the price changes: http://en.wikipedia.org/wiki/Revenue_management http://en.wikipedia.org/wiki/Revenue_management

ExpertFlyer 12y ago

What no one is telling you is that the actual published fare tariffs don't change that often. What does change and is dynamically managed by the airlines revenue management departments is the availability of different fare classes that the tariffs book into. It's the combination of fares and fare class availability that determine the current fares available for a flight (and not just the lowest fare). On ExpertFlyer, we show all of this hidden raw information that normally only travel agents have been able to see as we buy the data from the airline reservation systems. The first few pages of our education guide give a simple overview of how this works: http://www.expertflyer.com/edu-guide.pdf http://www.expertflyer.com/edu-guide.pdf

oostevo 12y ago
In case it helps: I've been a subscriber for several years, and this is the first I've seen the Education Guide. It might just be because I'm oblivious, but perhaps you might want to make it more prominent on the "New to ExpertFlyer" page? I've learned everything in there by osmosis at this point, but the strategies would have been a cool thing to know when I was getting started.

pbreit 12y ago

An article like this needs to at least mention that the relatively unsophisticated pricing approach by Southwest has led it to generally outperform the rest of its competition for decades (I know, staying out of bankruptcy is not a very high bar).

coldcode 12y ago
Since their fares are not comparable since they don't let anyone show theirs in the same list as other airlines, you really cannot know if they are cheaper or not. In reality this means they are able to set their prices on average higher than those who have to compete in a list. Better control vs. more exposure.
sib 12y ago
Much of Southwest's profitability actually comes from doing a great job hedging against fuel cost changes, rather than making extraordinary margins on the seats.