What is dynamic pricing? Want to find out how this discriminatory pricing practice used by airlines, is pushing up the cost of your flights? And, most importantly, want to understand how to beat the system to get cheaper prices? Read on…
Once upon a time, I was a consumer protection lawyer and although I traded my Blackberry for a backpack nearly four years ago, my interest in consumer protection issues holds strong.
So, when I recently tried to book a flight from the USA to Colombia and saw my flight price had increased due to a little-known practice called dynamic pricing (more on this in a sec), I saw red.
Underhand, undisclosed and about as consumer protection un-friendly as you can get – despite being perfectly legal – I’m writing this article to spread the word, to explain the practice and to equip you with some tips and tools to beat the big boys at their own game.
What is dynamic pricing?
Ask an economist and you’ll get a very in-depth description of dynamic pricing that includes things like price elasticity, market forces and consumer demand. If you want a detailed description, you can find one here.
For the rest of us who don’t have a degree in economics (and don’t want one), dynamic pricing is basically the practice of setting a retail price according to demand.
In simple terms when talking about flight prices this means that it’s going to cost you more to travel to Paris over Valentine’s weekend compared to taking a mid-week flight to a holiday destination in the low season. Peak periods, weekend travel and nice flight times are generally going to cost you more – and most people are both familiar with and ok with that idea.
So, if that’s the case, what’s the problem with dynamic pricing? The answer comes when you learn that, thanks to snazzy online tracking technology, companies are able to price flights not just according to time of day, season and popularity, but on an individual basis according to how interested you seem to be in the particular flight and travel in general.
Yes, it’s true (see this USA Today article if you’re not convinced).
How do airlines do this?
You might, quite rightly, be wondering how the airlines know that you’re super keen on a particular flight or route (travel from Phoenix to Cartagena in my case).
Sadly, the answer is simple – the number of times you check flight details online (as well as past purchasing activity) is collected through the use of innocently sounding cookies, which follow your browsing behaviour around the web.
The unfairness of dynamic pricing by airlines
While most of us accept that crossing the Atlantic to go and see family two days before Christmas is going to cost more than if you take the same trip during the hurricane season, what happens when pricing gets really personal?
Taking an abstract example, most consumers would be outraged if the price of their favourite bar of chocolate or bottle of wine in the supermarket went up every time they strolled past the item trying to decide whether to break their diet/budget and buy it.
However, in the world of the internet, that’s exactly what happens when you regularly look at flight prices over time.
The smart systems employed by the airlines get alerted to the fact that you’re tempted by a certain destination and as time goes by, the price goes up.
Meanwhile, someone who pops into the shop, goes straight to that bottle of wine/bar of chocolate…or flight… and instantly makes a purchase is much more likely to get the original, baseline price on offer.
Fair or not fair?
I think most of us would agree that two people getting exactly the same product/service but paying different prices according to how many times they checked the prices or booked in the past is flat-out unfair. In two words, it’s price discrimination.
What makes it even worse is that most consumers aren’t aware that dynamic pricing is going on. People tend to book flights without knowing what other people have paid and there is no clear warning that price discrimination is at play.
If an airline had an upfront warning that prices rise according to the number of times you look at a flight, wouldn’t you alter your shopping practices to get cheaper flight prices?
A concrete example of dynamic pricing in practice
It’s pretty hard to believe that dynamic pricing happens and yet it does. And, to prove that this elusive unicorn does exist and is not an urban internet myth, I have a solid example of it below from my most recent flight booking experience.
Yet, it’s not the first time I’ve experienced it.
The first time was several years ago when I was looking at flights with Virgin Atlantic heading from London to the USA. For weeks I checked the prices and little by little the cost crept up…to the point that I eventually made a decision to buy through fear that the prices were going to keep going up to a point I couldn’t afford.
That night, at home, I opened my laptop and found that the prices had gone down by hundreds of pounds (for two people) and back to the original price I’d seen weeks ago. At the time I thought I’d stumbled across a great deal and booked in a heartbeat. It wasn’t until later I realised that all I’d done was book the tickets from a different computer (at home compared to at work).
My second experience was when I booked a flight with Easyjet from Cyprus back to the UK. My friend had been checking the prices for weeks online before booking. She sent me her flight confirmation complete with the price she paid so I could be sure to book myself onto the same flight. Not having done any pre-checking of flights myself, I managed to buy tickets for exactly the same flight for £20 less than my friend.
Most recently, and the occasion when I took the time to preserve some real, hard evidence of dynamic pricing (or flight price discrimination) was just a couple of weeks ago. I had been obsessively checking prices for a trip from the USA to Colombia. I wasn’t sure of my USA departure point or Colombian landing point so I spent a lot of time on Skyscanner comparing routes and prices.
Settling on a route from Phoenix to Cartagena, I checked the price a few more times before booking – and just as I went to buy, the price conspicuously jumped. It wasn’t by much, but still…
Heading over to another browser (more on this below), I conducted the identical search – same search site, same departure airport, same destination, same day, same flight time, same airline. It was exactly the same flight and….low and behold, the price was less.
Here it is:
What you see on the left-hand side are the search results that came up after weeks of searching for flights to Colombia.
On the right-hand side is the identical search but conducted in a fresh browser i.e. without the internet knowing who I was and that I had an interest in this flight.
Shocked? Yes, it was the first time I realised that a) this practice goes on and b) that it is perfectly legal.
Speaking of which…
How is this legal?
As an ex-consumer protection lawyer, it staggers me that this practice can be legal. However, it is. How? My best guess is that those little cookie browser policies that annoyingly pop up when you go onto a new website hold the key. Commonly, we click “agree” to those pop-ups just to make them go away, yet in doing so we are accepting a vital bit of small print, which I’m guessing is what allows airlines to track your details and price their flights accordingly.
Looking at Spirit’s policy (I’m picking on Spirit because they are the airline that most recently gave me dynamic pricing), here’s what they say about cookies:
We allow certain third-party companies to serve ads and/or collect certain anonymous information when you visit our website. These companies may use information (not including your name, email address, telephone number or any other personally identifiable information) about your visits to this and other websites in order to provide advertisements about goods and services of interest to you. Such third parties do not collect personally identifiable information. If you would like more information about this practice and to know your choices about not having this information used by these companies, you can visit the Network Advertising Initiative website.”
I’m no expert on privacy policies but it’s my best guess that airlines (all of which have similar policies), rely on this kind of wording to argue that we, as consumers, have been sufficiently informed of the kind of dynamic pricing practices that go on behind the scenes.
Change is needed
I don’t know about you, but I don’t find the above wording nearly clear enough, nor prominent enough (tucked away in the terms and conditions). What I’d really like to see, in order to be able to make a fully informed buying decision, is something along these lines:
“Through cookies we collect details about your visits to our website. Using this data, we may set prices on an individual basis according to the number of times you look at a flight or your past buying behaviour. This might include raising flight prices for you on an individual basis. In order to avoid these higher prices, please clear your cookies before booking.”
Of course, this is a pipe dream and absent any regulation to enforce it, this kind of clear warning is not something we are likely to see any time soon (or ever?).
But don’t worry, there are some things you can do to make sure you don’t fall prey to (a.k.a get shafted by) dynamic pricing.
What you can do to avoid the great dynamic pricing scam?
Although I don’t know the technical details behind cookies and how they work for airlines, I do know what has worked for me.
Clear your cookies before you book
In the past, clearing my cookies has proven to be a good way to refresh the airline’s prices back to the base rate I was originally quoted. If you don’t want to clear all of your cookies (i.e. including the ones that store stuff that is useful on other sites), you can clear them on a website-by-website basis.
Use a different computer/device
When I finally booked my Virgin Atlantic flight a few years ago, using a different laptop in a different location took me back to the original flight prices I’d been quoted.
Use a different browser
I have two browsers installed on my laptop – Safari for everyday use and Google Chrome as a backup. Generally, my Chrome browser is cookie-free because I don’t use it often and as a result, I’m able to search the web as though I’m a new user – perfect for avoiding dynamic flight pricing. Hopping over to Chrome is how I managed to get the lower flight price for my trip to Cartagena.
Note: Your second browser doesn’t need to be Chrome, it just needs to be any other browser that hasn’t stored your previous flight checking or flight booking behaviour.
Use Incognito Mode
Of all the different ways to avoid discriminatory pricing, using “Incognito Mode” under the “File>New Incognito Window” menu on the Chrome browser has got to be my favourite. This separate browsing function is simple to activate, it doesn’t require clearing out any cookies and it guarantees your browsing privacy (because that is the whole point of Incognito Mode, right?).
I did a little test searching for my Cartagena flight in Incognito mode and it worked perfectly, stripping away any dynamic pricing.
Tip: not sure how to use it? Here’s a quick explanation and video on how to use Incognito Mode.
Due to its simplicity and certainty, I’d recommend using Chrome’s Incognito Mode above all other options listed above, but really go with whatever works best for you.
Cookies have become smarter…but so have we
Technology moves fast and since I wrote this post, cookies have become smarter, as have the companies using them. Now, it may no longer be enough to delete your cookies or, indeed, use Incognito mode in Google because companies are starting to store your IP address (a note of your physical location) and dynamically pricing your airfares and hotels based on searches done from your IP address.
The good news is that we’ve become smarter too and some solutions for avoiding dynamic pricing still exist:
Move physical address – no, I don’t mean move house but if you’ve been searching for flights at work (in your lunch break, of course, wink-wink), then try looking at home…or pop round to your mum’s or best friend’s place.
Try a VPN – these days I use a VPN to avoid dynamic pricing. A VPN (Virtual Private Network) operates by masking your IP address – you get to tell the Internet that you’re in Colorado and the Internet believes you. But, don’t forget, keep changing location each time you search.
Most VPNs have a monthly fee. However, many will offer a free trial or, if you’re booking a big trip, it can be worth subscribing for a month (the VPN charges can be pretty low and come with the added bonus that you can watch Netflix in another territory!).
Pro Booking Tips
If you are an air miles member, make sure that you are logged out of your membership account before you search. Cookies are used to store your membership details and I’d wage a bet that the searches you conducted while logged into your membership account will be tracked.
To be absolutely certain you’re getting a refreshed, new price and not dynamic pricing, I’d recommend doing both your usual search e.g. in the browser where you’ve been checking the flight price a lot, and a new search e.g. in Incognito Mode just before you book. If you are given two different prices, you can be pretty confident that the second, Incognito/cookie-free price has been stripped of all its individually set pricing.
Flight prices are one of the biggest barriers for many travellers and it angers me that airlines are able to take a person’s passion and interest to visit a place and use it against them, effectively forcing them to pay more to achieve their dreams.
The amount I ended up saving on my flight to Cartagena wasn’t huge, but it’s money I’d rather see in my pocket than the pockets of the airline’s shareholders. And all savings I make now help me pay for future trips.
Until the regulators or lawmakers step in to do what is right for consumers, I hope this article will level the playing field in some small way.
The ex-lawyer in me feels the need to point a few things out.
1: I’m no longer a lawyer and I can’t give legal advice. Duh.
2: This article has come about purely through personal observation. I’m not an expert on this topic and I don’t know the details behind the booking systems I’ve used – I’m just reporting what I’ve seen and experienced.
Finally, if you need any help on some of the more technical stuff I’ve mentioned here (installing browsers, clearing cookies or even just searching for flights), drop me a line and I’ll help as far as my amateur technical expertise permits.
Have you ever been the victim of discriminatory pricing? Were you even aware that it happened?
If getting cheap flights is a topic of interest for you, you might also be interested in my travel hacking series. Although it is specific to the UK, there are a lot of tips that will apply to every international traveller (or wannabe traveller).