Transparent Airfare Pricing Is Bad For Consumers, Makes No Sense

I countered that point by arguing that the last time airfare pricing was transparent was in the age of regulation, and that wasn’t a good thing for consumers, as airline tickets were way more expensive.

Regulations are good. Airline tickets should be expensive. Air travel is bad for the environment. Travel should occur when necessary and not out of frivolity.

The more I learn about the U.S. airline passenger transportation system, the less likely I am ever to fly with a U.S. carrier.

This "lack of transparency" really came about with the rise of dynamic pricing.

It used to be the case that airfares were relatively fixed based on schedule, but then revenue management realized you could charge more for specific routes and dates.

This is the same logic that underpins my support for airlines moving to dynamic pricing for award seats. Moving away from price transparency broadly benefits the traveling public.

@ yoloswag420 -- I certainly haven't noticed fares being "relatively fixed" in the past couple of decades, but I guess it depends how you define that. I agree that we've seen in increase in the fluctuation of airfare, though.

I'd argue that reflects increased competition in the industry, and legacy airlines having to compete with ultra low cost carriers. It's very hard to deny that the increase in fluctuation hasn't resulted in lower airfare options for consumers.

Okay - I’ll bite. How does it differ where you are?

Transparent pricing doesn’t make any sense and I don’t think will benefit anyone. Airfares, on the whole, especially when adjusting for inflation, are cheaper than ever. On the other hand, if you look through the whole multi-page fare rules for any given fare, pretty much every facet of what goes into *why* that price is the price, is explained. Does it make sense to the layperson? No. Should it? Also no.

It's not BA.
This BA apologist would accuse every of never flown with BA before, or never crossed the Atlantic, or set foot on an aeroplane (sic).

So yeah BA is the best the way Tim Dunn thinks Delta is premium.

Still waiting for a blogger or influencer run an airline. The only one we've seen so far..... LOL. Fyre Festival airlines.

Lately some seems to get the whole economics model worked out. Until they get a tough question.

"Who knows what happens tomorrow, who knows, we’ll see."

"I don’t have all the answers- at least not yet."

In just a few weeks we've got some hilariously infamous quotes.

Jeff Smisek and Bob Jordan is laughing so hard.

This is such a bizarre take. You think that having enough information to make an informed purchase decision is a bad thing. Really? I can't believe supposedly rational consumers are making this claim.

"but then revenue management realized you could charge more for specific routes and dates."

You also FORGOT the other significant part.
"revenue management realized you could charge VERY LITTLE for specific routes and dates."

People have to realize not to take affordable or low fares as granted.

Ben, if as you say this pricing was very limited and only in relatively few markets, then why have you devoted so much time and effort to explain your point of view. I would be very curious as to how many tickets are sold for solo travelers versus those with two or more people traveling together. I suspect the solo traveler is in the majority and therefore welcome the carriers backing away from the practice even though the solo traveler is paying the same either way. Logical conclusion? Probably not. But then again emotions are often not logical.

How much information do you need?

You have a product and a price associated with it. You like the product, buy it. You don't, walk away.

When you go buy eggs do you need to know why this brand is 30 cents more. Which farm and barn it's from. Is it from Suzy or Rose from May 14th or May 15th?

Do you expect Apple to breakdown how much it cost for each of the 2000+ parts to assemble an iPhone. Or how each part originated all they way to the location of the minerals harvested?
Then how much mark up and man hours put into it? Tariff is just one piece of information from few hundred thousands.

Transparency enough?
This is such a bizarre take.

When you go buy eggs do you need to know why this brand is 30 cents more. Which farm and barn it's from.

Yes actually I do check the farm to ensure it treats its chickens humanely (min. 108 sq. ft. of outdoor space per hen).

Because most people actually don't get it.

For instance, YOU.

Just another example of people feeling "oppressed" because they didn't get what they think they "deserve" - in this case, they "deserve" to pay the lowest fare ever offered for a given flight. Predictable result is "equality" - things get equally bad for everyone.

Hey, maybe airlines should run a Dutch auction, announce preliminary results 3 hours before the flight, but keep it open until boarding starts. Final price would be the same for everyone who ends up on the plane, but those who really want to get on a flight would be able to bump other people off it by outbidding them right at the gate.

Some airlines show (the lowest) price for multiple days at the same time; sometimes for a return offering a table.
That is more transparent than without it, and I like it.
The logic for the airline to do that is presumably that (roughly) the most-cost-conscious flyers fill up the lowest-loaded flights.

I guess we would all like transparency such as "for a return on this route, staying a Saturday night takes off between 25% and 35%" but I can't see why an airline would share that.

I'd count Global Airlines as a "blogger or influencer run airline" and we can all see how that's going...

The argument by many reminds me of the old joke about the USSR--two Russian peasant ladies lived across the road from each other. One had a cow, sold milk and was therefore (by local standards) rich. The other old lady had no cow and was poorer. A genie appeared and offered the poor lady one wish. Thinking for a moment she answered: ‘Kill my neighbor’s cow.’

The only thing that irks me about the lack of transparency with these new fares is what would happen if you had to change/split the reservation. Would half the fare carry over in value? Or is this a situation where they would adjust it back to a solo traveler. The later isn’t a crazy concept. You see that all the time when shopping in generals that if you return just part of the items in a bogo or the like the discount may not be honored but airfare lack of transparency on prices and constantly shifting dynamics makes it really hard to understand what you are buying.

Does expence equal necessity? I’m not downplaying the impact of air travel but the wealthy class is growing rapidly, and is a wealthy couples vacation to Italy more necessary than a poorer couples trip to visit a dying relative? Again, I get the sentiment but this take isn’t very well thought out.

Price transparency doesn't benefit consumers? What nonsense. Talk about industry schilling! Price transparency is FUNDAMENTAL in free markets. Without transparency it is a rigged game. That's what monopolies and colluding oligopolies (which airlines are) do.

Go to the grocery and 3 people in line have jugs of milk. One pays 40 cents, another $4 and another $20. Add a stock to your 401K, you pay $50, at the same time the next cube pays $10 and another pays $100. Go to the gas station and the price rolls like a slot machine. This is lack if transparency and Ben thinks this benefits consumers.

Are we to believed when you shop for a ticket, your friendly airline doesn’t "rememberç your query and use it to individually manipulate the prices you see?

Further, the example of Delta with a cost of 19.3 cents per seat mile is simplistic and ignores the supplemental revenue from baggage, mail, freight, etc. Further are we to believe an A321 with 220 passengers with 85% load is going to average that revenue?

Lastly, airlines spend huge sums on share buybacks. Claiming the industry margin is 2.7% fails to note buybacks often exceed profits and may incur long term debt. Buybacks used to be illegal. None of these manipulations benefit consumers.

I was going say…I’ve paid €20 and €150 for a RyanAir flight on the exact same route, so I’m not sure how that’s any different 🙂

Eskimo, how much does an iPhone price vary at an Apple store. None. Go to a cellular carrier and prices are built into the monthly rate.

Supply & Demand … just look at
Ride sharing
Event tickets and resellers
Trains, buses, ferries.
Hard to get items like Nvida GPUs
Cars
The list goes on.

There is a difference between monopoly, duopoly, price fixing versus normal free market dynamics. Government forcing transparency often results in bad experiences.

You can also argue that there should be no discrimination between customers, and that has more merit. Eg iPhone users being charged more than android or Mac users charged more than windows etc. but it’s very grey area since local purchasing power differs between country to country. Like you can often find cheaper airfares if you VPN through India.

A basic principle of fair market operation is that buyers and sellers have access to the same information. Once one side (usually, but not always, the seller) starts controlling information then they're in a position to manipulate the market. That they do is obvious and its a triumph of PR that they're not only able to convince the public that wholesale market manipulation is actually a free, competitive, market but also convince a lot of people.

In reality the airlines are a cartel. The market is divided up among a handful of players who offer the absolute minimum for the maximum they can get away with, everyone offering similar product and similar prices when there's some semblance of competition. They know that their product is irreplaceable and behave accordingly.

I couldn’t agree more with this take. The ‘should everyone pay $.20/mi” is a great argument also.

Some seem to be mixing up hidden pricing and price transparency. Price transparency means you can compare pricing with your search parameters across similar vendors, which airlines do quite well. Companies are free to sell any product they want at any price without telling you why. That is not a violation of a ‘free market’, precisely because competitors can come in and beat that price and you as the consumer can choose the competitor.

Now, if the airlines wanted to save grace with this and roll it out on a wider scale, just run it as a more dedicated promotion. “Travel 3 days beginning Thursday or Friday with at least two people and score 80% off!”

Is that what people want in “transparency”?

@upstarter

You really know nothing about econ.
Based on this reply or your bogus
"Price transparency is FUNDAMENTAL in free markets". It a whole different thing.

The airline pricing is as transparent as it gets. You see the price and what you see is what you pay.

But I'll tell you something that will blow your mind if you can actually understand it, but I doubt it.

Your 9am JFK-LHR and 10pm JFK-LHR or even the 9am JFK-LHR on a different day.... IS A DIFFERENT PRODUCT.

Finally somebody who actually understands very basic econ.

You're mixing very different things together.

Econ and insider trading is a whole different concept.

You're right about the cartel thing but a rigged market doesn't mean market is not transparent. It's transparently rigged.

That's Western propaganda to undermine the Soviets.

They probably have similar jokes too.

two American peasant ladies lived across the road from each other. One had a cow, sold milk and was therefore (by local standards) rich. The other old lady had no cow and was poorer. A genie appeared and offered the poor lady one wish. Thinking for a moment she answered: ‘Let Trump puts tariff on neighbor’s cow and use that milk to feed a Ukrainian cow.’

You’re missing the entire point of all of this. Lack of fare transparency is fine. Fare buckets/constant change in prices are part of any business. Booking last minute at a higher price is smart business for an airline. But what we just saw was a step too far. Higher fares for solo travelers is blatant discrimination

Stop trying to make this about “all the fares are now higher than before.” If you truly are arguing on behalf of the airlines, that sounds like a great business move.

I am totally baffled by this whole thing. Is this something peculiar to the US domestic market?

You nailed it Ben. Unfortunately a piece like this IS required, as highlighted by the uneducated swill that go looking for a conspiracy theory that fits what they want to rail about on any given day.

This is a business and industry globally unlike any other whatsoever. It is the same ALL. AROUND. THE. WORLD. As you pointed out, it is extremely expensive to operate, and not particularly profitable (if at all, for many airlines). The only way to even keep their noses above the waterline, much less float, is for the continuation of the status quo, vis-a-vis opaque pricing models. It also goes without saying that airlines are not the only industry with opaque pricing models - how about mattress companies?

The luke-warm morons amongst us can opt not to fly if it doesn’t suit them, whilst the rest of us will enjoy the competition.

Not guaranteed to, but increased transparency MAY lead to increased competition; therefore a downward force on prices. Can’t think of an industry where transparency drives less competition. Who cares if businesses subsidize cheaper fares; you don’t think businesses don’t know that!?! Obviously those businesses feel it’s a worthwhile investment or they pass it onto their clients. The idea that price transparency leads to higher prices is asinine.

Is target pricing/market segmentation = non-transparent pricing?

To me, non-transparent pricing is when the final total price is different from the price you were quoted in the first place. For example, when I book a room with Hyatt in Europe, I would be quoted Eur500, and at check out it is broken down into Eur400 for room, Eur50 for service fees and then Eur50 for tax. Total price is still Eur500.

But when I book a room with Hyatt in Japan, I would be quoted JPY50,000, then at check out I will see a price of room at JPY50,000 plus JPY10,000 for service fees and JPY5,000 for tax, with a total price of JPY65,000. I think this is non-transparent pricing because not all hotels in Japan charges the same 20% service fees.

With the differences in individual and multiple tickets pricing, it is just market segmentation. I don’t see anything wrong with it, granted that I don’t know the restrictions on the tickets, such as no pre-select seats etc. I don’t think airlines are selling the same product to everyone even though you may be traveling on the same route at the same time. We all buy tickets at different times with different numbers of travelers and reasons, and those are different “soft” products.

In this case, an individual airline decided on certain routes that it make more sense for it to sell at a discount when you buy 2 or more tickets at the same time. There is nothing wrong with it. The airline may not want to lower the price of a single ticket to compete with a competitor but also doesn’t want to lose customers to them, so they give out discounts when you buy multiple tickets to lower the average price per ticket for you. Another reason could be because individual travelers usually select aisle or window seats leaving middle seat unfilled. By selling multiple tickets at a discount, the airline can choose to fill all those middle seats. Of course, the airline can also choose to discount individual tickets who choose to fill those middle seats voluntarily. But these are all just market segmentation, and not really non-transparent pricing.

Well written Ben - totally agree. Side note - there are some limited markets where airfares are pretty fixed. Examples - domestic flights in Fiji and French Polynesia, different carriers but both basically hardly move the ticket price. I'm specifically speaking about the price over time, but perhaps they do some form of price discrimination.

Two questions -

1) Airlines also charge passengers differently based on if they stay over a Saturday night or not, regardless of how far they book in advance. Is this also “a step too far”, and if not where do you draw the line?

2) Many businesses have discounts for seniors, students, and kids. This is comparable discrimination to what we saw, are you also opposed to these?

You ask Ben to stop pointing out that the outcome of this was broadly negative for consumers yet offer nothing in your comment to suggest otherwise, only more of the type of rhetoric that led to that.

Different fares for solo vs group travelers? Yes. Inventory management and segmenting passengers in airline pricing? No, that’s universal to all airlines and geographies.

I think part of this discussion depends on how you define transparency.
To me, it doesn't mean that everybody pays the same. To me it means that customers know how to get a good price. And I believe that's a good thing - incentives works best when they are clear, transparent. It (somewhat) aligns the airline and passenger objectives - full flights at reasonable prices will be profitable! Many low cost carriers actually do it this way!
For example, book a year in advance, get a lower price; fill empty seats last minute, get a lower price; spend more than x, get y% off...
Budget carriers in Asia do exactly that: sales a year in advance to provide a base load to make a flight viable, then sell seats at competitive, profitable rates. Whenever the plane load (relative to the departure date) drops below the needed level, a few seats go on sale to close the gap. I'd consider that transparent pricing...
The US airlines try to charge individuals/segments as much as they can get away with: business travelers (because the traveler is not paying out of their own pocket), iphone users (because Apple users have more disposable income), departure airport (rich vs poor), non-stops, singles, etc etc
While I understand that pricing approach, some of these can be perceived as odious when they become public - and backfire... And this only works, if everybody does it. That's why legacy carriers in Europe/Asia dibablot less of it than in the US - LCC are stronger competitors than in the US...

A few thoughts:
(1) In a LOT of markets (there are exceptions), domestic air travel in the US is an oligopoly. Quite a few airports don't even have all of the "big four", or even "big three", serving them. PIA, one of the cited airports where this was being done, only has AA, UA, and G4 (Allegiant). Of the airports cited, I think only RSW has WN. So, saying "If you don't like what an airline is doing, take your money elsewhere" strikes me as dubious if all of the limited number of actors in a market are doing the same thing, not unlike issues with mandatory arbitration waivers (or companies demanding to use your work on AI).

(2) So, the issue I have with the "solo traveler penalty" is more that it wasn't really advertised, and as a result folks were presumably not intended to be able to just buy the second seat for extra space (I jokingly referred to "paying deep discount for the briefcase" somewhere else) even though the airline would arguably be better off if a bunch of folks did that (since it would reduce weight by, I presume, about 200-250 lbs/passenger between them and their bags).

(3) I think we're all wary of aggressive "segmentation" since we have no way of determining if we're getting hosed. We're already seeing apparent efforts to also offer "individualized" pricing suggested (to the point of folks being told to use VPNs or clear caches while booking). That's not the grocery store giving members a discount, that's the grocery store telling you to put on VR glasses so it can swap prices on you. You might benefit, you might not, but at the end of the day the airline /will/ benefit.

(4) So, I get what is being said about airlines' CASM.

On the one hand, I think we need to accept that not all seat-miles are created equal - some "very short" flights (e.g. ATL-CSG, CLT-GSO, or IAD-ORF) probably have higher costs than longer-haul flights because of fuel consumption issues, smaller planes (less seats to distribute the cost of the pilots across), and so on. At the same time, some super-long-haul flights can end up at the other end of the spectrum because fuel consumption rises when you have to carry loads and loads of additional fuel.

On the other hand, I feel like the airline industry has perhaps gone too far in telling folks to just "bend over and take it" at times. For an example, DL has made legal SDC switches unavailable (e.g. MCO-JFK-ORF is a legal routing that I can book on the website, but the SDC system often won't even allow switching between JFK-connecting itineraries - it wants to force ATL and I've even had DL agents try to claim that JFK is not a legal connecting city). I could probably rattle off other cases of similar things, but the bottom line is that there's a sense that the airlines really aren't playing according to Hoyle.

Do I think most of us want to go back to pre-1970s pricing? No. But do I think some of us wouldn't mind some guardrails on pricing practices even if it pushed up "base" prices by a bit? I think that's also true - and the argument about getting cheaper fares reminds me of the whole mess surrounding Standard Oil.

As a EU based company with a high number of flights per year, we often spend a lot of money on tickets. AMS-LON for €500,-, AAL-AMS for €800,- or CPH-LON for €600,- are no exceptions. These are 1 tot 1.5 hour flights. The reason is many times a booking on short notice and same (or next) day return.

We will be sitting next to a couple going for a weekend to London, paying €130,- for the same trip, which is still absolutely possible.

Companies with business trips, subsidizes leisure travel. Isn't that great? The one that can pay to most, pays the most. Getting rid of this system, will rack up prices for the ones going on personal trips, and lower the price for companies. It's weird that the ones that are complaining the most about the system of ticket prices, are the leisure travelers, that benefits most,

To some extent...any form of transparency in America is bad for the consumer and the population.
Just imagine if the majority of Americans find out that the country is actually run by a group of people who don't really care about them and would create schemes like crypto, have the attention span of a rock and is willing to throw the population under a bus and then revert back to a slightly worse version of what was before and then claim credit for "fixing" the previous mess.
To find that out and then realise you voted to put that person in charge? No thanks, I'd rather just close my eyes and think MAGA MAGA MAGA.

The complexity and dynamics of the fare buckets benefits us a lot:
- As a former consultant road warrior, airlines held those seats knowing I’d pay top dollar for a last minute seat and expense I’d it
- my higher last minute fare subsidized the cheaper fares sold months ago
- Ever have an emergency where you needed to be somewhere else on the globe asap? If airlines didn’t hold out those high fare buckets, less likely to be able to grab that last minute seat to see a loved one in the hospital, etc

The farther from a commodity an airline seat is, the more value proposition there is on many levels for consumers

We can't have a rational discussion about whether transparency is better or worse without first defining what we mean by transparency in pricing. Unlike medical services, the prices for airline tickets are fully disclosed prior to purchase, so by my definition they are already fully transparent. But perhaps to some people transparency means some sort of price stability or price uniformity. That definition would require further refinement of course - stability over what period of time? What would uniformity mean? Same price every time of day? Every day of the week? Same price for non-stop versus connecting?

The debate over transparency misses the real point. What people are really reacting to is not a lack of transparency, but that pricing is complex and fluid. We like complexity when it provides us the options we want, but at the same time we like simplicity when it comes to actually making our choices. It's impossible to have both.

I'm not sure why anyone would think consumers need more information. When you put in dates of travel unless you're traveling between small cities you're given a whole host of options including the price. You pick based upon price and/or schedule. Airlines provide you a list of additional fees, most of which are totally avoidable. Have people become so dumb they can't properly book a flight?

Well said

I can't believe the number of laboratory animals yapping that we need to understand our handlers feelings. Don't you realize once they can't shrink the seat size further or remove any more armrests they'll just euthanize us and only fly Ai agents around?

Define transparency. A single airline in a single market might have 150 fares filed, some might be 10 pages long. There could be changes several times per day.

I think it's the "add on's" that one should be worried about. The base line price for all of the airlines is more or less the same. NOT ALL but most. But then the customer looks at one price. Hey that's pretty good! Oh, wait, you want a checked bag? +$$, ah...a seat rather than an overhead bus strap? +$$$$. Oh, and a seatbelt rather than a rope tied to both sides? +$, There is a change machine in the aft galley. You can make change so you can use the pay toilet.

GVV2 and GVV4 fares were common before the pandemic, especially on premium-heavy routes where the front seats more than covers the cost and where every seat filled up in the Economy cabin is extra income.

It was the same playbook used for millenia fighting for the sacred piece of land based on religious beliefs.

MAGA is just a modern day propaganda on a crusade. Ancient times did the same when a big daddy whose propaganda is to reclaim the holy cup from the chair empire.

What I think travel consumers want and should have from the airlines before booking is the actual total cost of the ticket before they buy including: base fair, extras if any for seat assignment, taxes, fees, food, luggage stowage, etc. We deserve to know exactly how much it will cost to fly from X to Y and back fully, before we make our choice to purchase the ticket or not, so we can compare that bottom line with other tickets and flights.

Ben, I disagree with your assessment and definition of airfare transparency.
Capitalism and deregulation should be the focus. That's the world we live on the USA.

However, price "fixing" by alliances, code shares on selective routes should be monitored for pricing collusion. I am afraid with current presidential administration that wants to dismantle watchdogs for bad behavior we are going to see unfair pricing.

So I still don't get your comments on fare transparency. Fare transparency on disclosing all fees was something that got regulated under democratic administration's. Let's hope that this doesn't go by the wayside with lack of oversight by the government.

In US healthcare you often don't know the price until after you have the procedure. Comparing to that makes it seems like airfare has full price transparency.

I understand there's a wide range of interpretation of "transparency." But I struggle to understand why having one additional bit of information (in this particular case, how the price of a product I'm considering purchasing can be potentially affected) is bad.

I personally found this lastest revelation interesting, along with all the other useful tips and insights I pick up from travel and airline articles and blogs.

I don't believe anyone's forced to read or use this information. I appreciate the investigative & journalistic efforts in making it available for those interested.