For the impatient reader, flight prices can change all the time but there is no evidence to suggest that there is a malicious attempt by the travel industry to read your cookies and increase prices when you try to book your flights online.
The obvious reason is of course 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 really 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 the prices did 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 asked 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 need to make sure that 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 behaviour.
One of the tools the airlines use to manage availability and revenue on any given flight is so called booking classes.
On each flight every cabin, for example Economy or Business, will be divided into a number of booking classes. 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 2 booking classes in the Economy cabin the pricing could look like this
|Economy booking class||Number of available seats||Price per seat ($)|
When 10 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 destination or product experts the OTA needs systems developers and programmers to build features and smart interactive booking management tools.
Since OTAs are very technology focused, price changes that occur can most often be explained by the reason listed under Technology further down in the article. Here under the heading OTA we will instead 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 simply 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 booking cannot be completed the customer will simply 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 that 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 time of booking but just as likely any time before departure.
Consequently – and most importantly – there is no way of knowing which bookings that will be profitable over the life of the booking at the time of 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 loosing 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 today making the same claims about the price comparison sites. 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 sites 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 every time you are planning a trip.
And even though, there will be times where 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.
There are so many connections, processes and calculations that need to be performed correctly for even the simplest 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 real availability
When you perform a search for flights online you are searching 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 makes it close to impossible to work with real time data processing. Instead we are served a mirror image of what we know was correct last time we checked. This is a cache.
This is a simplified explanation but all I want you to understand is that there will always be situations where real availability and the cached mirror availability is 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 availability to the OTA
- The cache maintained by the OTA to speed up search times
And needless to say, there is a strong case that price comparison sites use caches as well. 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 of course happen at any stage until the booking is paid and confirmed.
But from my experience errors it occurs at three separate points in the booking flow:
1. Price changes when moving from price comparison site to OTA
Price changes that occur 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 addons.
2. Price change caused by moving from cached to real 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 real availability.
When this check is performed seats are temporarily reserved for a number of minutes unless of course the check fails and – you guessed it – you receive an error.
3. Booking error due to price change when attempting to confirm booking
Though each system is different you will finally come to 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. It is rare that this price check 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 as well as rich content and ancillaries such as bags, seats, leg room and meals.
With added features and options follows more information to 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 there are 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?
There will be a price mis-match that the visitor needs to spot or will they just book to be disappointed that baggage was indeed not included.
This may seem like a minor point 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 are constantly evolving and do create opportunities and promises for the future. 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 influence the price.
Why do flight ticket prices fluctuate?
Flight ticket prices may change and fluctuate due to changes in availability, technical errors and due to differences between cached and real availability.
What if I book a flight and the price goes down?
Generally speaking flight price will increase as you move closer to departure. Should you however find that you for example 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 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 at any time as prices are dynamic and follow availability in any given price or booking class.