Searches trigger Price Surges in AU

Old Feb 25, 19, 5:39 pm
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Searches trigger Price Surges in AU

I think we all know that one of the general principles of airline yield management is the last seats on a particular flight generally sell for the highest cost (ignoring class of service).

I only had the conversation the other day about whether constant searching of similar flights for say a city pair within a date range from a device/s from the same network was being analysed by the airline and I might get different pricing to someone else searching from another IP (in the same market). I imagine the technology exists for manipulative pricing but I have not seen it deployed or heard of the allegation.

However a more watered down version of this exists and has been admitted to. From the Senate Regional Airfares Inquiry it has been revealed that pricing of flights will jump based on number of searches by potential purchasers. I am not sure if this community are aware of this.

North West Star
... an example last year of a Townsville to Cloncurry flight which jumped from around $600 to $1200 when the Flinders Hwy was closed.

Virgin CEO Rob Sharp said he was aware of the example and said it was an "anomaly" not caused by human intervention.

"There's a perception that we've got people sitting there watching all of these things and we go, 'Yahoo, we can put the price up'," Mr Sharp said.

"There was no-one looking at it, the prices went up because the system automatically says, 'demand is up, so price goes up."

Mr Sharp said the process was driven by algorithms not one of their 15 human staff who do demand forecasting for the entire company.

"Everyone was trying to look at the fares and the more people that went on and looked at them, the more our machine was saying, 'look, there are a lot of people interested in flying'," he said,
So I imagine due to the higher number of searches (not just sales and lower number of seats) the pricing of these seats was pushed up automatically. I worry that 'personalised' pricing will come soon unless it is outlawed for public policy reasons not just in the airline industry but a whole heap of online sales markets.
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Old Feb 25, 19, 11:42 pm
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[mod hat] This thread is not QF specific, in fact it only mentions Virgin. I will let it sit here for a while to see if the discussion will move towards a Qantas angle but I reserve the right to move it to a different forum. [/mod hat]
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Old Feb 26, 19, 1:04 am
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I suppose the QF angle is that QF has some fairly sophisticated demand prediction and yield management software which covers things like school holiday dates and sporting events. I have never met anyone with detailed knowledge about this system, it is pretty secret, but I have seen it at work in subtle ways. An example no longer relevant so open for discussion as it can't be considered confidential is QF keeping track of director meeting dates in NYC for certain companies which had Australian connection as it led to a spike in F seat demand back when QF flew 744 into JFK with an F cabin. A class would disappear on certain dates leaving only full-fare F.

But I have not seen QF raise fares due to spike in demand such as floods. I was in Brisbane in 2011 for the flood flying out on QF on one of the last planes out with ticket bought on the day and it was not exorbinantly priced. Remember being impressed with the terrific job QF did at BNE that day.
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Old Feb 26, 19, 4:27 pm
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Suspect the Virgin 'anomaly' is as much to do with actual bookings as searches.
knock out a fare bucket and the price can jump pretty quickly.
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Old Feb 26, 19, 6:03 pm
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Originally Posted by moa999 View Post
Suspect the Virgin 'anomaly' is as much to do with actual bookings as searches.
knock out a fare bucket and the price can jump pretty quickly.
That would be my thought (given what I've seen of Virgin IT....)
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Old Feb 27, 19, 2:36 pm
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Originally Posted by DownUnderFlyer View Post
[mod hat] This thread is not QF specific, in fact it only mentions Virgin. I will let it sit here for a while to see if the discussion will move towards a Qantas angle but I reserve the right to move it to a different forum. [/mod hat]
Oh the headline of the article - I inagine if this practice is indeed true it won;t be limited to Virgin.
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Old Mar 5, 19, 2:22 pm
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Originally Posted by mikalee View Post
Oh the headline of the article - I inagine if this practice is indeed true it won;t be limited to Virgin.
Not necessarily, they may use an in house yield system if their own design.
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Old Mar 5, 19, 3:30 pm
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Well QF a couple of years ago did state that they wanted to develop such technology where the system would notice a specific user would search for flights and they could adjust pricing for it. One of its acquisitions was an IT company that did such data mining and predictive behaviour.
The defence of such systems is that it could get a known customer to buy a ticket if the system sees that the variety of searches may correlate to a search for a cheaper fare, better connections etc and offer a better price that would get the customer to buy a fare.
Of course most people think that the airline would just jack up the price to get a higher fare and therefore yield, but they are ignoring the fact that a high price may lead to a lost sale altogether as that customer may not choose to fly or even fly another airline.
I have noticed that QF site not only states if there are 5 or fewer seats in that fare bucket but also now states how many customers have searched the same flights in the past. All more pressure on the customer to book a fare now....and not wait for the DSC promotion.....
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Old Mar 6, 19, 7:32 pm
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A QF insider, admittedly I cannot vouch for her knowledge, once told me that I would be best to searches on the QF webpage in incognito mode without logging into my QF FF account. Take this for what it is worth.
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Old Mar 7, 19, 12:06 am
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While this may have been tested, I can never see it being implemented (at least for long)..

Why?
Well the minute it becomes well known, then everyone starts to use a comparison site or online agent - Qantas loses bookings to other airlines, and has to pay commissions and/or lose the ancillary revenue from hotels/ car hire etc.
Theyve spent years convincing people you get the best fares by booking directly, and could lose it very quick;y.
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Old Mar 7, 19, 12:18 am
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Originally Posted by Blackcloud View Post
I have noticed that QF site not only states if there are 5 or fewer seats in that fare bucket but also now states how many customers have searched the same flights in the past. All more pressure on the customer to book a fare now....and not wait for the DSC promotion.....
I understand the same may be true for the larger hotel aggregators, where I often see a message about "X people are looking right now". I don't know whether this is marketing "nudge" to encourage me to buy right now, or real data
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Old Mar 13, 19, 4:10 am
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Originally Posted by RTWFF View Post
I understand the same may be true for the larger hotel aggregators, where I often see a message about "X people are looking right now". I don't know whether this is marketing "nudge" to encourage me to buy right now, or real data
It's likely to be both. It's probably a marketing message using real data.
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