How Does Dynamic Pricing For Airlines Affect Your Travels?

12.03.2024 - 02:23 / forbes.com / Delta Airlines

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 LUV , Delta Airlines, American Airlines AAL 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:

Dynamic pricing is a practice across several industries in which the price of a product or service fluctuates with demand.

Surge pricing, as seen with rideshare companies like Uber UBER , is a type of dynamic pricing that refers to the increase in price when demand is high.

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.

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.

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