Understanding Ticket Price Fluctuations
 

Hello all,

I hope this is the right place to post the following rant. Apologies if this is a matter that has been discussed here in the past or whether it's an issue which has been widely pursued or even resolved with some satisfaction in other media forums. I did conduct a quick search of these forums and did not come across a thread that raises the issue of ticket price fluctuations in quite the same way.


We've all looked for airline tickets and seen their price fluctuate over time based on seat supply and demand, competitive pressure among carriers and possibly on other criteria known to the airlines but unknown, certainly to me, and probably to the public at large.
Are we too naive in our assumption that ticket price differentials over the short term are attributable solely to the laws of supply and demand? More particularly, I'd like to know why ticket prices sometimes fluctuate – not merely increase, but actually go up and down – not only on a daily but on an hourly basis.

During the past 2 months I've booked two tickets (by coincidence, both on airlines that are members of the Star Alliance) only to see their price rise following my purchase. In the first instance I monitored a Brussels Airlines fare from TLV to BRU and saw it fluctuate modestly somewhat over the course of a week. When I finalised my travel plans the ticket price was some tens of dollars more expensive than the price quoted on the airline's website the previous day and I assumed that prices had begun to rise as we were getting closer to departure day and as seat availability was disappearing. Imagine my chagrin when the day after I had purchased the ticket I saw that the price had dropped by tens of dollars to a price I had originally seen 2 weeks previous.

In the second instance, over the course of 4-5 days, I monitored a TLV-LAX route on the Lufthansa webpage while putting together future travel plans. The ticket price for the flight combination I investigated stayed constant up until the very morning my travel plans became finalised. Positing that the over-$110 increase in ticket price was the result of decreasing seat availability I went ahead and made my purchase. Two-three hours later I noticed that the ticket price had dropped to the price I had originally seen posted on the Lufthansa website over the previous 4-5 days! Moreover, it stayed at that lower price for the next few days and even dropped a few dollars after that!!

What could account for a price rise that lasts mere hours? Did a significantly large group of people book and then cancel reservations on that particular flight combination? If lower-priced ticket inventory (i.e. lower-priced ticket classes) suddenly became in short supply why did this lower-priced inventory just as suddenly reappear only hours after my purchase of higher-priced inventory and continued to be sold many days later? Perhaps Lufthansa suddenly had to factor in much higher fuel costs for a number of hours before recalculating these costs and again lowering ticket prices?

To the heart of the issue: is it possible that my repeated entering and exiting of the Lufthansa website and my mere investigation of a particular Lufthansa route to see how arrival times etc. aligned with other ongoing flights on other carriers was enough to trigger the airline's system to register a spike in booking velocity (i.e. interest in that flight) and consequently to raise prices for that particular ticket combination? Is mere interest in a specific flight or flight combination – as opposed to a firm booking – sufficient to initiate a price rise? Can a prospective passenger unwittingly manipulate an airline's dynamic pricing settings to his/her detriment and inadvertently raise the price of a flight ticket just by checking availability and price on an airline's webpage?

After all, many airlines (including Lufthansa) enable technical features on their website that keep tabs of a route and travel date request typed into their system from a particular computer. For example, each time I entered the Lufthansa website their system remembered that I had been looking up a TLV-LAX route so I did not need to re-enter that info into the computer.
In the same vein, it is not inconceivable that airline booking systems keep tab of repeated interest – and not just firm reservations – and that this may be enough to trigger price hikes.

The question then becomes; why did the price go down after I had made a firm purchase? Are some price hikes 'personalised'? Are they tailored to the interests and concerns over availability of particular individuals entering airline sites from specific computers regardless of what overall booking velocity and seating availability on that flight are in reality? Do airlines use browser cookies and similar methods to raise prices based on the number of times a particular individual has entered their site to check prices?

Obviously, I've suddenly found an interest in airline pricing policy because I'm miffed at purchasing a ticket precisely within an extremely narrow window of a few hours during which the ticket combo I was interested in was priced higher than it had been during the previous 4-5 days and (at time of writing) higher than it would be advertised during the following week. However, though there is a readily ridiculed air of 'conspiracy' around this issue perhaps there's also a measure of cynicism and perhaps illegality surrounding such practices……if indeed there is some basis in fact regarding the questions raised above. Surely these matters are worthy of further investigation for the benefit of a broader section of flyers. Have these 'personalisation of price hike' issues been investigated in the past? If so where can such findings be obtained? Is it within a passenger's rights to ask to see an airline's price chart for their fare over the days prior to and following their purchase of this fare? What precise criteria and methodology do airlines use in order to construct their dynamic pricing packages?

I have contacted Lufthansa with a request that they clarify this matter – along with a hopeful request that they refund the difference between ticket prices. I have yet to hear from them, though admittedly my correspondence began just before the Christmas holiday period.

Any input from airline insiders, people with similar experiences, etc. appreciated.

For international flights, normally I'll check the fares for 1 week then purchase the ticket when I feel it's the suitable price. Once I buy the ticket (non-refundable), I'll never check the fares again!

Ticket price fluctuations are here to stay, the only thing we can do is manage them. Has anyone tried this service? http://www.optionsaway.com
Says it's only available from Chicago at the moment.

A cheaper alternative to FareLock is very appealing, but we have trust them to deliver on the price when the option is exercised.

Yes repeated check has done that
Next time to finalize ask some one else to check from different location not from same internet connection that moght give you your answer

The reservation systems get thousands times more queries than actual purchases. For example, if you go to Orbitz and ask for something simple like STL-LAX roundtrip, you'll get 500+ results.

After buying just two tickets and observing a price increase and decrease not in your favor, it just means you're unlucky. It's like sitting down at a slot machine and making two spins and not winning.

The airline is not monitoring your searches, nor would it make any sense to do so, nor can they. Just relax and let the airline computers/aka slot machines do their thing. ;)

Understanding Ticket Price Fluctuations
 

Some airlines have tracked individual queries based off of logins, or more generically, cookies.
http://www.bitterwallet.com/save-money-on-ryanair-fares-by-deleting-your-cookies/42133

I couldn't speak for the airlines you mentioned, but it would be within their technical capabilities.

I use the ITA matrix to perform more anonymous searches, especially when frequently checking fares. ITA wants to sell you the lowest priced ticket, so they are neutral.

Other posters suggest that your query is drowned out in the volume, which is true if fully anonymised, but probably not true if you log in/don't clear your browser cookies.

Beyond that, fares are a complete mystery to me, although I did have a positive experience with Fare Lock on united.com. Saved $160 for two passengers (5% of the price) by using the 7 day Fare Lock.

the airlines run their revenue management algorithms constantly ... over a given period of time prices on some routes will remain stable, fares on other routes will see some slight changes, and still other routes will see fares fluctuate wildly

sometimes you win, and sometimes they win ... it's really almost impossible to predict, and that's where (at least for most US carriers) the 24-hour change/cancellation window can be a big help

I also track the airfare on various websites for a week. For instance I'm goin to Sao Paulo in April to catch a Trans Atlantic Cruise. I saw airfares going for $1,00 from SFO-GRU one way. Then I went to an airline discounter and booked the ticket for $474 and monitored the prices and so far this is the cheapest and I highly doubt it will go down any further than this. I'm happy with the routing and airlines(AeroMexico to Mexico City with a 13 hour layover to see the city then on TAM to GRU).

Every day there are tens of thousands of flights with millions of passengers on those flights.

Do you really think Lufthansa, or any other airline, is monitoring each one of these people's searches to decide exactly when to raise their specific ticket and then move it back down?

Let's be reasonable people.

They would be wasting their times if they tracked each and every reservation. Remember this the passenger seated next to you could have paid a higher or lower fare. It's not discrimination people it's who chose to book their trip at the right time. Look if you were so obsessed with getting the best fare you would be sitting at home all day long. You would be shocked that websites such as Orbitz is selling a 1 way fare from Europe on Luftthansa for $2,500 dollars but by going to another website you can get the 1 way for around $700 etc.

Just book the fare that fits your needs at the time and be happy. Just know to look over all possible options and itineraries before you book. Once you've found the best itinerary that meets your individual needs then book it. Just because the Jones's down the street paid $500 more for the same ticket does not mean you have to pay the same price if you book it at the right time and for the right price.

Begin doing a price analysis and look over as many resources as possible. Go down to your brick and mortar travel agency, call consolidators do whatever it takes to get the best airfare. Remember QPR Quality Price Ratio. If your willing to forgo frequent flier miles and go with lots of restrictions to save money then do so.

I'm afraid a lot of FT members here are so obsessed with earning miles but that comes at a premium. I'm not bashing you as I love earning FF miles but if it came down to an inexpensive ticket without miles and a nice holiday I would take that over staying home any day.

You just need to do whats within your means at the present time. That is why airlines have First Class, Business Class and Economy Class. That is why there are different fare basis for the same flight . If you see L,M,N,Q,T etc you will get the less expensive flights but may not earn miles and get restrictions.

I have found out here that there are some FTers who would steer you in a different direction to earn miles by booking a higher fare code but what works for them may not work for you. You have to evaluate every transaction you make and ask yourself the pros and cons.

Let's say you saved on airfare and you could extend your vacation I'm sure you would not mind losing some FF miles that you can earn on another trip.

I'm in no way trying to bash the people who like to earn miles. I love earning miles but will do anything to save money even if it means driving down to Los Angeles to catch an international flight.

It's helpful to think of airline pricing in terms of your long-term average price of travel. Think of a particularly low fare as a deep discount, rather than of a higher fare as somehow being price-gouging.

I'm not saying they do, but it would not be difficult to do with some creative cookie solution. And not put much additional load on their systems.

Now there is a revolutionary thought that is right on the money. (pun intended)

Airlines use 'dynamic pricing' which basically means a mathematical algorithm designed to try and get them the best average price overall.

There is NO LONGER any set price or value of a seat on a plane. That is what people have trouble getting their head around. Each seat is worth exactly what someone is willing to pay for it at the time they book it. That's 'dynamic pricing'.

You CANNOT complain that a seat sold at a cheaper price or crow that it sold at a higher price at an earlier or later date. It did NOT sell at a cheaper or higher price. THAT seat sold at the price it sold for. What price ANOTHER seat sold for is irrelvant in 'dyamic pricing'.

What gets in the way of course is that every individual only wants to look at it from their own single viewpoint. Did I pay too much or did I get a bargain? Well, if you actually understood dynamic pricing you would know that you paid exactly what you were willing to pay.

Continuing to check back to see what OTHER seats are selling for after you have booked is laughable.

It's a pet peeve of mine. You hear about travelers who typically only fly on super-cheap fares, say $150 for MSY-LAX, complaining that they are being extorted when they have to pay $500 or more for the same ticket. Sorry folks. The real price is closer to $500 than $100.

Firstly, thanks for the input. Secondly, apologies if the response below is repetitive. I'm both trying to address issues you've raised and clarify my point ad nauseam.
Let me begin by saying that further retrospective investigation of ticket prices following my booking was not made as part of a masochistic endeavour nor was I actively seeking to find fault with the airline but rather it was an attempt to finalise the flight details of other members of my party who could not previously commit to flights that I had booked. It was only then that I noticed how prices had risen for a few short hours before settling back into a steady more steady pattern.

From your responses I see that some people do indeed think that the airlines monitor individual searches and adjust price accordingly for the individual consumer while others think this to be utter nonsense. Lacking feedback from industry insiders, whether they be people responsible for creating and maintaining the reservation systems or people involved in the fare structuring process, I'm still unsure how the system works. I have to say that my natural inclination is to shy away from the 'conspiracy theories' while not being surprised by anything people, firms and governments may do.
An attitude of resignation that 'that's simply how it is nowadays' or advice to check prices, buy a ticket and ever look back don't satisfy the inquisitive. When somebody wants to know why the sun always rises in the east one isn't content with a 'that's just the way it is' answer, right?

Though not in the computer field myself, as someone who is surrounded by, and has gained insight from, professional tech wizards on a daily basis, I do accept that in purely technical terms it is extraordinarily easy to keep track of a person's activities on a particular website. An airline does not need to be the NSA to do this. As mentioned above, their sites readily remember the route and dates you wish to take and record this information in order to make use of their site customer-friendly. On a more general level, take some time to read the privacy policies of various websites. They go to great pains to explain to you what identifying information they do not collect simply because it actually IS very easy to automatically collect and log a variety of data from people entering a website. Additionally, the information we ourselves request to receive over the web can be increasingly personalised without placing any strain on the systems of the firms or bodies providing such services. In order to do this, they collate a great deal of information about our web-surfing habits (and again, I'm not making a judgment about whether this is positive and acceptable or not). Make a purchase or simply go searching for goods on Amazon and for a few weeks or months after your entry into their site they send out e-mails with information on items similar or complementary to the products you viewed on their site. For a much longer period, they will show you similarly complementary items whenever you simply enter their site. This personalisation of the web experience is very common. So that airlines CAN track individual activity is less of an issue than the question of 'DO they?' I'm genuinely in the dark about this and seeking answers and opinions but more on this a littler later.

To address other concerns raised in some responses: I'm not a complete novice to travel and did indeed conduct extensive research both online and with a flesh and blood travel agent before settling on the airline and routing. The specific Lufthansa route was the one that suited me in terms of dates and pricing with no concern for mileage accruement. It was only then that I concentrated on the Lufthansa website, going in and out of the site multiple times during the course of a week or so to determine how the various routes they offered and how the specific route I was interested in fit in with onward travel plans on other carriers. During this time I did continue to check with other sources from time to time just to make sure that nothing 'better' suddenly popped up. So I did my 'due diligence' and focused on Lufthansa flights after cross-checking multiple sites, airlines and personal needs.
I did not intend to raise the issue of price variations across different websites, whether they be aggregator websites or the websites of travel agents. My specific concern is solely with extreme short term (i.e. over a few hours) price fluctuation found on the Lufthansa website.

I fully accept that fixed supply and variable demand affect pricing and am not surprised at, and do not begrudge, the person sitting next to me who paid a different fare. I understand the nature of fare classes ('buckets') and I know that as part of their yield management airlines use dynamic pricing to sell seats. By its very nature this dynamic pricing process is 'discriminatory' (not using this term in a negative sense by any means. Simply mean it makes fine distinctions, differentiates) precisely because it is primarily driven by customer dynamics. So an airline would have every incentive to accrue as much information about customer activities on its website as it can in order to adjust its fares according to demand velocity. The technology available today means that the airline can easily gauge variations in demand across the board as well as on an individual basis. Indeed, it is the collective material gathered about many individuals that create the broader picture for the airline. Separating individual information about customer habits from collective habits is a simple task. So to the question of whether I really think Lufthansa collects data from each person that enters their site: yes, I think they do. The mass of data collected from individual activities on their website is exactly what drives the dynamic pricing system. Question is, is the system also dynamically responsive to individual activities?

Relatedly, doesn't it make sense that dynamic pricing discrimination becomes more advantageous as the probability of selling out classes of seats increases? Less seats overall or less seats in a particular price bracket/'bucket' leads to higher prices, leads to even greater booking velocity, leads to increased or steady ticket prices until just before a flight when prices may drop precipitously in order to fill seats or rise incredibly in order to take advantage of customers needing those flights. But what explains a hefty price rise over only a few hours, followed by a return to 'normalcy' and even a dip in prices over the longer term? This makes perfect sense if dynamic pricing is personalised based on an individual customer's projected booking potential. Not so, if it's not.
As I wrote in my original post, if Lufthansa were to tell me that by pure coincidence at the same time as I was about to order tickets, they had briefly entertained the idea of using a smaller aircraft on my preferred routes with a decreased seating capacity but that hours later they had returned to the original aircraft for that route, or that tens of others were also booking the same flights and that mere hours later tens of people had decided to cancel those reservations, I would understand that the vagaries of supply and demand – which in theory is what by dynamic pricing seeks to reflect, gauge, regulate and take advantage of – had caused a coincidental short term price hike. This may have been the case. As I wrote, I'm not looking for a conspiracy or accusing the airline of price gouging. However, at the very least, the scenario of personalised/individual pricing does seem as equally likely as the explanation that I was simply unlucky in timing…..and that still doesn't explain what exactly occurred in those few hours to cause the system to raise and then lower the price of my particular route.

Airline seats are both fixed and perishable goods so fares should systematically rise as overall price sensitivity of consumers declines the closer you get to departure date or whenever there is a registered increase in booking velocity. Airlines take advantage (i.e. respond) of this by structuring their fares dynamically. Fair enough. However, do – not CAN – they structure fares solely across the board equally for all customers, or do they tailor fares on a more individual basis based on the information they accrue from a person's activity on their site?
The airline pricing policies are incredibly arcane and opaque. Technologically, it is very simple to tailor price to individual consumers based on consumer behaviour on their sites. Do airlines do this? Is it ethical? Is it legal? It certainly doesn't seem fair if – again, IF – they do this. Moreover, why should customers simply accept all price fluctuations without understanding them? Undoubtedly, I've gained from these adjustments and re-adjustments in fares in the past as much as I've been disadvantaged by them. Right now, I'd like to better understand them.