For the impatient reader, flight prices can change all the time, but there is no evidence to suggest a malicious attempt by the travel industry to read your cookies and increase costs when you try to book your flights online.
The apparent reason is that travel and tourism is a very transparent industry and that any form or attempt to cheat the consumer would be subject to actions by consumer protection agencies.
So what is going on with flight prices? Let’s take a look at why flight prices change.
Well, it is possible to increase prices from a technological point of view. And then there are all the reports and stories of individual searches where prices increase while trying to book the flight.
Flight prices can and do change. Most of us are familiar with the scenario where we see a price on a price comparison site, select it, and then after completing passenger names, passport numbers, etc., the booking fails.
And then colorful language follows. And on top of it, the price disappears when we search again! Or even worse, it is still there, but it is impossible to book the flight.
Why flight prices change
This article will explain how and why flight prices can change. We will look at answering the question “Why do flight prices change?” from four different perspectives.
- The airline: provider and often seller of flights
- The Online Travel Agent (OTA): seller acting as a representative
- The price comparison site: the aggregator comparing OTAs
- Systems and technology: pricing and distribution systems used
When we understand why flight prices can change we will be in a better position to form an opinion to support or reject our original claim that there is no malicious attempt to tamper with prices by the travel industry.
We will then round off the article by answering the most common questions in a Frequently asked question format.
1. The airline and price changes
Airlines manage millions of tickets and prices using extremely sophisticated revenue management systems.
After all, if you strip the airline’s business model down to its bare essentials, airlines must make sure they sell enough seats to make money on flights planned to depart many months from now.
And as airlines do not know anything about the future, they make predictions based on experience and expected user behavior.
One of the tools the airlines use to manage availability and revenue on any given flight is so-called booking classes.
For example, in Economy or Business, every cabin will be divided into many booking classes on each flight. Each booking class will have a set number of seats and a fixed price point.
It could look like this:
|Economy||T, K, L, O, Q, R, S, V, W|
|Business||C, D, B|
And if we focus on just two booking classes in the Economy cabin, the pricing could look like this
|Economy booking class||Number of available seats||Price per seat ($)|
When ten seats in booking class T are sold at $50 per seat, the new lowest price would be $75 and put you in K-class.
Summary and conclusion:
For the price to change, all it takes is for someone else to book the last available seat in a booking class for your price to increase.
2. How price changes hurt the OTA
The OTA is truly more of a Travel Aggregator than a Travel Agent in its traditional sense. OTAs have a business model where they need volume to make money, and it is a hands-off, machine and systems-intensive environment.
Whereas a traditional storefront travel agent would have a destination or product expert, the OTA needs systems developers and programmers to build features and innovative interactive booking management tools.
Since OTAs are very technology-focused, price changes can most often be explained by the reason listed under technology further down in the article. Here under the heading OTA, we will focus on why it makes no sense for OTAs to tamper with prices from a commercial perspective.
I will give you two good reasons why it is not in the interest of the OTA to risk losing a booking by increasing the price.
Reason 1: Most visitors use a price comparison site, and the customer can move on to the next available option
Today OTAs have business relationships with price comparison sites. The price comparison sites will show all providers offering any given trip. If the customer cannot complete the booking, the customer will go back to the price comparison site and select a different provider or trip.
Reason 2: OTAs need volumes of bookings, and there is no way of knowing which booking will be profitable
To compete, OTAs are today often forced to sell tickets below cost. Successful OTAs have developed systems to only compete for bookings where they have a fair chance of making additional revenue by, e.g., selling add-ons like visa services, cancellation insurance, VIP service, or flexible date options.
These upsells can be purchased at the time of booking but just as likely any time before departure.
Consequently – and most importantly – there is no way of knowing which bookings will be profitable over the life of the booking.
Summary and conclusion:
OTAs need to sell volumes of flights where there is a good possibility of making additional revenue during the lifespan of the booking. And as there are no ways to identify these bookings beforehand, it makes no sense for OTAs to risk losing bookings by increasing prices.
3. Price comparison sites are simply comparing prices
My first job in the travel industry was as the Online Manager for a company operating traditional travel agencies. I remember being accused of “price dumping” and ruining the market for everyone when I launched the company’s first Internet Booking Engine powered by Amadeus and a low-cost content Aggregator.
Ironically, Online Travel Agencies are making the same claims about price comparison sites today. Price comparison sites are so powerful that many OTAs need them to survive. Yet it is a medicine that is sometimes hard to swallow as the balance of power is very much in favor of the price comparison sites.
But from the customer’s point of view, they are a fantastic tool for finding the lowest price on flights.
The price comparison site’s sole reason for existence is to help you find the lowest price. They do not care if you book with one OTA or another. Their most precious resource is you, the visitor coming back to search for cheap flights whenever you plan a trip.
And even though there will be times when you select a price at the price comparison site to receive an error at the OTA, this will most likely be explained by technical aspects. We will address the technical aspect in the final section of this article.
Summary and conclusion:
Price comparison sites want you, the visitor, to find the lowest possible price for the flight of your choice. There is no incentive to increase flight prices.
4. Technology creates opportunities and errors
I will start by stating the obvious. Data systems, API connections, timeouts, outages, etc., are the main culprits for most errors we encounter online when we try to book a flight.
So many connections, processes, and calculations must be performed correctly for even the most straightforward search to be completed and displayed.
Here I will list three reasons that can cause prices to change when you try to book your flight.
Reason 1: Cache vs. actual availability
When you search for flights online, you are searching for a cached availability designed to mirror actual availability.
Why use caches? Without getting too technical, the pure volume of searches and the need for fast response times make it nearly impossible to work with real-time data processing. Instead, we are served a mirror image of what we know was correct the last time we checked. This is a cache.
This is a simplified explanation, but I want you to understand that there will always be situations where actual availability and the cached mirror availability are out of sync.
And the further you get from the actual owner of the inventory (the airline), the more caches you risk encountering.
A simple example could be:
- The airline load available seats in the Global Distribution System (GDS)
- The GDS returns an answer to the OTA from the GDS cache.
- The OTA will, on their end, also use a cache to speed up delivery time on results for searches on popular destinations.
In this example, a sale of one seat would need to update:
- The number of available seats loaded in GDS by airline
- The cache at the GDS to provide the availability to the OTA
- The OTA maintains the cache to speed up search times
And needless to say, there is a strong case that price comparison sites also use caches. When we look at it like this, isn’t it amazing that we do not see price errors more often?
Reason 2: Holding and releasing available seats
Price changes and errors can happen until the booking is paid and confirmed.
But from my experience errors, it occurs at three different points in the booking flow:
1. Price changes when moving from a price comparison site to OTA
Price changes between price comparison sites and the OTA can usually be explained by cache errors or errors in communicating or receiving the correct price with selected add-ons.
2. Price change caused by moving from cached to actual availability at OTA
Though each system is different, there is a point in each booking flow where we leave cached availability and confirm selected seats to current availability.
When this check is performed, seats are temporarily reserved for several minutes unless the check fails and – you guessed it – you receive an error.
3. Booking error due to price change when attempting to confirm a booking
Though each system differs, you will finally reach a step where your booking is confirmed. This is usually after you have completed all the passenger details and other needed information.
At this step, and before you receive your confirmation, there will be a final behind-the-scenes price calculation check. This price check rarely fails, but it does happen.
Reason 3: Dealing with complexity and the New Distribution Capability (NDC)
We have already touched upon this situation, but I feel it needs its own section.
With the introduction of the New Distribution Capability (NDC) by the International Air Transportation Association (IATA), we are seeing a much more flexible XML-based system for delivering prices and rich content and ancillaries such as bags, seats, leg room, and meals.
With added features and options, more information can be communicated between platforms.
And when we observe price comparison sites, in particular, we can see that there are OTAs that support NDC content and those that do not.
So how will you accurately compare these options when one may be with and the other without checked bags?
And what happens when the price for added baggage is added and updated on the price comparison site but not automatically selected when you arrive at the OTA?
Will there be a price mismatch that the visitor needs to spot, or will they book to be disappointed that baggage was indeed not included?
This may seem minor, but with more ancillaries to be offered, the environment will become more complex, and these types of “honest mistakes” will occur.
Summary and conclusion:
Technology and standards constantly evolve and create future opportunities and promises. But the use of cached availability in combination with complex data structures and an inventory that changes by the second continues to be the main reason for errors and price changes.
Frequently asked questions
Do flight prices change the more you search?
Flight prices can change while you search, but there is no reason to believe that the number of searches you perform influences the cost.
Why do flight ticket prices fluctuate?
Flight ticket prices may change and fluctuate due to changes in availability, technical errors, and differences between cached and actual availability.
What if I book a flight and the price goes down?
Generally speaking, flight prices will increase as you move closer to departure. If you find that you miss a campaign fare by a couple of hours, you should look into if there is a 24-hour grace period for refunds in your market.
Do ticket prices go down closer to the flight?
Generally speaking, the opposite applies, and flight prices will increase the closer we get to the flight’s departure.
Do flight prices go down on Tuesday?
Flight prices are determined by supply and demand, and I have never seen any hard evidence that one particular weekday would be a superior day for booking a flight.
Do flight prices change throughout the day?
Flight prices can change anytime as prices are dynamic and follow availability in any given price or booking class.