Question about airline prices

Why do prices on airline tickets for the same flight numbers fluctuate so much on web sites like Travelocity, Priceline, Orbitz, etc.?

I’m looking into travel in November. The same flight changed prices about 15 times over 3 days. I’m not kidding. 15 times at least. Up down, up down. First it was $577, then $366, then $417, then $266, then it went as high as $700, then it went down to $388, then bounced up to $417, and then back down to $277.

I check it every couple of hours. It’s up, it’s down, it’s up, it’s down. Right now it’s at $290. In an hour it could be at $800 for all I know.

I fully expect the price to increase as that particular flight gets filled up. But what’s with the bouncing ball effect? What factors are they using to adjust the price so erratically?

The major factors are competition, supply, and demand. Also known as “yield management”.

The airlines have complicated algorithms that attempt to sell the maximum number of seats per plane for the maximum profit. Every time an airline adjusts their fare the other airlines change their fare in response. It seems to be a never ending chain reaction. In the internet age where many people shop solely on price they can’t afford to not have the lowest price.

Airline type here,

jsmith is right as far as he/she goes. The key thing to understand is that there is not one price for any given flight. At any given moment there are 30 or 40 or 50 prices for different seats on that flight based on different rules.

Want an unrestricted fare? $450.
Willing to pay a $25 change penalty if needed? $375
Willing to stay overnight or buy roundtrip? $300
Willing to stay overnight, buy roundtrip, AND pay a $25 change penaltyif needed? $250
etc.

The typical travel website doesn’t show you all the details, at least not directly. If you go to the airline’s own site you’ll often see the very same flight with a dozen different prices and if you click the link for “more details”, you’ll see all the rules and ramifications.

So that’s the static part of the complexity: You’re thinking you’re just buying a seat, and they’re really selling a seat and a bunch of contractual details, each of which is a different price.
Now for the dynamic part. They’re actually running a continuous auction for each set of purchase rules for each flight on each date. At any moment there is a certain demand for tickets with that rule-set. Meanwhile, there are a certain number of hours/days/weeks untl the flight leaves.

Their goal is to adjust the price so 3 minutes before the plane leaves they will have auctioned each seat of each type to the highest bidder over the last couple of months.

Meanwhile, the goal of their comptitors is to do the same, but for $1 less so they capture all the customers.

And the customer’s goal is to play the two off against each other, in effect having them in an bidding war to “buy” the customer’s purchase for the lowest possible price.
And each airline can see the up-to-the-moment fares of the other in complete detail. Imagine KMart & Wal-Mart knew each other’s price on every item in every store to the penny and knew about price changes withinin seconds of them happening.

Now imagine the customers buy considering only one issue, price. And on a ballpark-$400 purchase they’ll gladly go to insane contortions like fly 4 legs or stay up all night to save $5 out of that $400. That behavior, insane though it is, is in fact what about 85% of the traveling public uses to make their purchase decisions. Price trumps everything, and a tiny price difference is all it takes.
Now add in a few smart middlemen like Orbitz, et al, who’re paid a flat fee for getting a sale, any sale, and you have a recipe for duelling computers with us poor humans reduced to watching in bewilderment as the machines fight each other to come up with the number they think wil outsmart the other guiy’s computers … for a few seconds … until the situation shifts again.
You are seeeing the future of commerce.

Your grocery store wants to do the same thing to you, continuously adjusting the prices to charge extra for whatever’s in your basket. They’re thinking they can outsmart you and gouge you an extra $20 or whatever.

And it’ll work awesome until you get smarter/more defensive, or until their competition starts doing the same thing. And then it’ll degenerate into the incomprehsible and ultimately destructive mess we’ve got in the airline industry.

The Pittsburgh Post-Gazette had an article about this very thing today:

http://www.post-gazette.com/pg/05289/589463.stm

That kind of ignores my OP a bit. I’m talkning about the same flight (8:15am on November 19th, flight 675) and the same seat (24A). At 12:30pm today it was $766. At 12:38pm (same seat, same flight) it was $274. Right now (108am) its at $582.
For it to have dropped almost $500 in 8 minutes is maddening!

Oh, yeah. And all of these price changes happened on the same website, Travelocity.

How the heck did they decide in 8 minutes that they needed to drop the price $500.
How the heck do I decide to hit the reservation button! I just know the moment I buy at $274 it’ll drop to $148! :smack: It’s like playing the stock market!

What may have happened is that the airline released some new seats/prices for some spots on that flight. Those seats (not a seat assignment, but some slots) were the new low price (Travelocity just shows the lowest price available) and when they sold out very quickly it reported the next lowest available price. One of the keys to finding low priced flights is shopping just after the airline releases new fares since only a limited number of seats on any one flight will have those low fares.

It is all a big game. You are trying to get the best deal from them, they are trying to get the best deal from you.

You probably have a price in your mind that you consider a fair deal (lets say $200). This morning perhaps they were trying to catch business travelers who decided over the weekend $800 was not a big deal. Maybe Grandma passed away and the family called the travel agency first thing in the morning. A few took the bait, now it is time to target the casual travelers again. It could be that few people buy tickets over the weekend so they raised the rate so everyone else will raise theirs in response. If they sale a lot of tickets in the morning they wanted a lower price than everyone else and for you to think you are getting a deal (Wow, I got it for $275, that was $500 off!) All this is purely conjecture, I have no factual proof of this. The formula that each airline uses is probably not only a highly guarded secret but too complicated for the average human to figure out.

You may be one to something, stock market style/ebay style seats may be a fun idea. Start all the seats at 1 dollar and let people bid them up. I wonder how well that would work.

The whole thing drives me nuts. I fly alot, both for business & pleasure.

When it’s for business I’m not very price conscious, as I’m not paying the tab, my employer/clients are (this is probably the attitude the airlines like).

But when I fly for pleasure, price is everything. In June my wife & I flew out west for vacation. I bought the tickets in January thinking I struck the best deal. By the time June came around I had found the same tickets (same flight, seats, website [Orbitz], everything) for $210 less (total, not per ticket). $210 is 2, maybe 3 meals in a very nice restaurant. That just eats at you!