Ever book a flight and learn that other passengers on your aircraft paid wildly different fares for the exact same service? It’s not uncommon, thanks to a strategy called dynamic pricing, Dynamic pricing is common with most airlines, and can greatly affect your travel and budget.
And while its commonplace, dynamic pricing remains somewhat of a mystery. Southwest Airlines, Delta Airlines, American Airlines and Jetblue Airways all declined to comment for this article. Luckily, the practice is fairly widespread and well known, and a lot less undercover thanks to the Internet, where seeing transparent prices for flights and airlines just takes a quick search. Though travel enthusiasts are constantly guessing exactly when airfares are cheapest, the best days to buy, book, takeoff and save money. Dynamic pricing is completely legal, as long as it follows the standard consumer protection laws.
Here’s what you need to know about dynamic pricing:
What Is Dynamic Pricing?
Dynamic pricing is a practice across several industries in which the price of a product or service fluctuates with demand.
Dynamic Pricing Vs Surge Pricing?
Surge pricing, as seen with rideshare companies like Uber, is a type of dynamic pricing that refers to the increase in price when demand is high.
What Are Examples Of Dynamic Pricing Across A Few Different Industries?
Dynamic pricing can be seen throughout the travel industry, in pretty much all facets. Disney World and other theme parks charge different admission rates depending on the time of year, with lower pricing during less crowded times. Hotels often offer lower rates for their rooms outside of peak season and may offer specials like a hotel credit for the restaurant or spa to lure in travelers off-peak.
Wendy’s is starting dynamic pricing, with new “surge” rates that will increase menu prices when demand is highest. Many restaurants do this already, offering lunch specials or early bird meals at lower prices for the same product, to encourage customers to visit for a lower bill at a typically less popular time.
Weekday specials, like a discounted manicure and pedicure at a nail salon or complimentary blowout with hair cut and color at a salon, are another example of dynamic pricing in the beauty industry.
How Does Dynamic Pricing Appear In The Airline Industry?
In travel, dynamic pricing may result in high priced flights on popular travel days, like the days before and after a holiday, and lower priced flights on weekdays, shoulder seasons or off-season.
Is This Good Or Bad For Travelers?
Dynamic pricing can be both good and bad for travelers, especially depending on a travelers’ flexibility. The exact same seat on a flight may fluctuate in price depending on the date. Those who have an urge to visit a specific place but aren’t tied to a restrictive schedule may benefit because they can book their preferred flight at a cheaper rate on a less popular day. Dynamic pricing can be bad for travelers who are on tighter schedules and need to fly at popular times. For example, dynamic pricing means that a direct route from New York City to Chicago, which may cost under $100 in the fall, can increase by five times or more in the days before and after Thanksgiving.
How Can Travelers Ensure They Are Getting Good Prices For Their Travels?
Planning ahead is generally the best way to secure good prices on travel. Last minute flights tend to be more expensive, due to dynamic pricing, because there is a higher demand for less product, that is, the few remaining available seats on a flight. Tools like Google’s Flight Tracker can help keep tabs on the fluctuating price of flights and help travelers compare similar flights and fares.
Capital One Travel offers a price match guarantee, meaning that if travelers find a better price for a flight, hotel or rental car on another site within 24 hours of booking, they’ll be awarded a travel credit for the difference.
Websites like Hopper also look at travel data to predict when fares are the cheapest and NerdWallet also analyzes spending patterns to find trends on how to save money, like the best days to book a flight. Keep an eye on flash sales from various airlines, as well as points redemption deals to plan ahead for booking travel with a good price.