Airfare used to change a few times per day on any given route. Now it may change several times per hour. Welcome to the new world of hyperdynamic pricing.
Artificial intelligence software has allowed what Julie Weed of the New York Times calls a “cat-and-mouse game, where travel companies are almost always the cat.” While that doesn’t preclude stumbling upon exceptional deals or even occasional mistake fares, the model is quick to act and takes in a number of new considerations in pricing airfare.
While in the past hotel rooms and airfare were based upon historical data and current reservations, software now will factor additional information in its pricing calculus:
- global news events
- weather predictions
- trending Google searches
- social media posts
- local event schedules
- other factors that could affect demand
Somehow, this software scans the webs for all of these things and then executes airfare pricing accordingly. So say a famous artist announces a new concert in a city. This A.I. software will note that, calculate potential increase in demand based upon the size of the concert venue and historic attendance data, and push airfare pricing up. Or let’s say a hurricane is coming. The system will make a demand reduction and lower airfare accordingly, updating it hourly as weather conditions change.
On the horizon are systems that can decipher so-called “unstructured data” that includes scanning hotel reviews for consumer sentiment or pinpointing seat assignments or particular hotel rooms based upon Instagram photos.
CONCLUSION
On the one hand, it is a little disconcerting that these systems are able to pull in so much information, no doubt about us as well. But on the other hand, you cannot help but to be impressed by the progression of technology which now allows such precision in airfare and hotel pricing.
AKA price gouging.
But it’s price gouging that’s based on Big Data, and AI, Machine Learning, and other buzzwords that suckers like to hear but don’t understand. So it’s OK.
I always wonder if my United app sees me checking the same itinerary over and over and maybe raises the price to make me think its already hit low and I need to buy now.
So far I have in a few cases cross checked on a private browsing session and I get the same price in both cases…but I’m worried for the future where they can price individually after you signal that you are already interested in a certain ticket.
It’s a common misconception—and a large percentage of consumers are certain it’s already happening. They even say they can prove it: they checked a price, but didn’t buy … and when they checked again, the price was higher! It’s a conspiracy! 😉
But if you think about it, airlines have no way to know several critical variables: the importance of the trip to you, how locked in you are to a specific date, or how price-sensitive you are. Indeed, there’s a cohort who, when presented with a higher price upon their second search, would make the decision *not* to buy as a result.
You’ve presented a problem and a solution.
In order to know the critical variables (or guesstimate, which is the AI way), airlines can (or do already) adjust pricing based on search criteria.
It is happening, just not systemically. All of the major carriers have been experimenting with this and it’s very likely that some of your readers have experienced being on the ass end of one of these tests.
The thing is habitual checking of a fare doesn’t necessarily mean they should jack up your fare. Different consumers have different price sensitivities. If they determine you aren’t price sensitive (maybe wealthy and/or very brand loyal) and you generally do a lot of checking before locking in a fare then they might tick up your fare a bit. They’ll keep doing this until they notice a change in your buying. If you aren’t as wealthy/brand loyal and have shown a willingness to fly other airlines, it actually makes sense to take the opposite approach (assuming you have competitive fares on the relevant route).
Individually tailored prices are happening, however. That’s unavoidable.
True. On a related point, United used to customize the cost of award tickets based on how many miles you had at the time! Gordon v. United Continental Holding Inc.
> …you cannot help but to be impressed by the progression of technology which now allows such precision in airfare and hotel pricing.
Sure I can. This is just a way to gouge customers and shine it up to make it appear to be an acceptable business practice to the gullible who will accept anything remotely techy.
I’ll pass on any company that does this. They can go fark themselves.