
When to Hold Out For a Lower Airfare - rrtwo
http://fivethirtyeight.com/features/when-to-hold-out-for-a-lower-airfare/
======
jsnell
I poked around a bit on 538 on the day it relaunched, but hadn't read anything
from there since then. Is this representative of the quality of articles? It
seems just embarrassing as an example of data-driven journalism. They are
evaluating the quality of a "big data" prediction algorithm based on 32
samples. The experimental setup is very odd, with such a short period of price
tracking, a bizarre baseline strategy, and ending the trials early (over half
right at the beginning!).

Or consider this gem: "For the five routes in which there was a financial
benefit to waiting, Kayak successfully reduced my fare in each instance. [...]
This is a sure sign of intelligence". Yes, of course if you cherry-pick 1/6 of
the trials (a whole 5 of them!), the system will look effective. What kind of
value is there in "analysis" of this level?

~~~
pdonis
I was underwhelmed as well. In addition to the items you point out, at the end
the article says:

 _"...it still might be worth your time and energy to use airfare prediction
software. Why? Because following the algorithm isn’t going to cost you more
money..."_

which is simply wrong, since the article explicitly gives examples of
following the algorithm costing the author more money.

~~~
callahad
I think the author was basing that statement on his previous assertion that:

> _If weighted equally, the prices paid, following Kayak’s algorithm, were 2
> percent higher than the initial March 29 prices. Wearing my statistical hat,
> I’d call that a tie between the two strategies._

The author also claims that:

> _in user surveys that in addition to appealing to quantitative types,
> another group of regular users said Farecast gave them “peace of mind.”_

So if the price difference is 2% (basically a wash either way), then waiting
would be a superior strategy because it "might actually relieve some of the
second-guessing that occurs when you’re left to your own devices," and that
peace of mind may be worth more than 2% of the ticket cost.

...or at least, I think that's the author's point.

------
gk1
I regularly book from Kayak, and I like their predictor.

A sensitivity setting would be nice. For example, when it says the fare is
likely to increase in the next few days, does that mean increase by $40 or
increase by $140? I'm more likely to give up a probable saving of $40 to be
comfortable in knowing my flight is finally booked, but I would wait if it's
$140. I imagine everyone's tolerance is different, which is why the
sensitivity setting would be nice.

------
cmsmith
This analysis ignores the fact that it might be beneficial to buy tickets more
than 14 days before your trip (an idea which always seemed like common sense
to me). The idea that fares rise monotonically for the last two weeks doesn't
mean that big data is dead.

------
dalek2point3
tl;dr version

You will probably not save any money following Kayak’s price prediction
algorithm and instead buying tickets two weeks ahead of your scheduled
departure is a reasonable strategy. You should use prediction algorithms
anyway, because they wont lose you money either and help you gain "piece of
mind".

------
ape4
What about availability. If you buy sooner that's worth something.

~~~
chrismcb
Well the pricing predictor is trying to predict when the prices go up and go
down. Availability effects the prices a lot. As prices go up, the availability
tends to go down.

I'd say one nice thing about buying early is better seat selection.

------
lafar6502
If Kayak/MSFT uses machine learning for price prediction and airlines are
doing the same for predicting their revenue, doesn't it result in both sides
quickly reacting to each other moves and countering opponent's actions? After
all, they're all using the same ticket sales data. Maybe that's why
recommendation engines don't seem to work?

------
egypturnash
Not included in the cost calculations: several days of remembering to check
the cost of the air fare every day, and stressing about whether or not you'll
end up paying a ton when the predictor erroneously tells you to wait. The
price differentials cited in this article are well worth just buying it and
having it out of the way, IMHO.

------
lnanek2
Southwest has a no cost flight change feature. So monitoring is worth a lot
more for them since you can take advantage of dips after you buy.

------
michaelochurch
_Because following the algorithm isn’t going to cost you more money, and it
might actually relieve some of the second-guessing that occurs when you’re
left to your own devices._

Disagree. Airfare pricing is adversarial. It used to be "common knowledge"
that buying tickets on Wednesday at 3:05am Eastern was optimal. Then, airlines
responded by jacking up prices at that time. You'll also get different prices
from an Incognito browser than one with cookies. I'd bet you get hosed if you
use your iPhone, for obvious reasons.

If something becomes commonly known as "the right way" to get fair prices, it
will surely lead to unfair prices as airlines take advantage of the herd.

Because it's adversarial, the landscape is constantly changing and there are
no guarantees.

~~~
twoodfin
Do you have any documentation on the incognito vs. cookies claim? I'm
skeptical that many airlines would do this when their "advertised" price is
readily available on so many other sites.

ITA's Matrix is my go-to choice. I wonder if they sell search metrics to the
airlines.

~~~
mitchellh
I don't have any documentation, but I've been flying A LOT for many years
(last year flew 108 flights for a total over over 150,000 miles). What the
parent comment above you is saying is true.

It is common knowledge among frequent flyers that you can get better prices
sometimes if you're not signed in. For example, if you fly 100,000 miles a
year with an airlines, they're pretty confident you're going to fly with them,
so why not show you a slightly higher fare? The worst part: it works. I go to
HipMunk sometimes and see a fare for $500 dollars less (on the same airline),
but I still book through my preferred airlines, because the benefits are worth
it for me: no hassle security, no hassle baggage (first on, first off), no
hassle boarding, good chance of 1st class upgrade, etc.

The good news is that if you do find a lower fare on ITA (and pretty much only
ITA), you can usually call the airlines and get that fare. Fares are bucketed
into fixed "fare classes" so if there is availability in a cheap bucket, the
airline MUST sell it to you.

The bad news for frequent flyers is that many benefits do not extend to these
cheaper fare buckets. For example, if I want even a _chance_ to be upgraded to
business class for free on a transatlantic flight, I have to purchase one of
the most expensive economy fare classes. Concrete example: I am flying to
Israel in a couple months; for the cheap economy fare it was $1400, but for a
chance at an upgrade it was $2,100. I took the $2,100 fare, because being in
business to TLV is quite important to me.

Its unfortunate, but its how it is.

~~~
Benjammer
Has anyone ever seen any hard evidence for the incognito/cookies price
differences other than cursory anecdotal evidence? I've only ever seen "I fly
a lot and everyone who flies a lot knows this is true" reasoning for this
phenomenon. Has anyone ever seen/done an actual experimental study on whether
or not this is a real thing?

I'm not necessarily doubting that this is a thing, I've just never seen hard
evidence.

~~~
chrismcb
I fly a lot, and spends weeks and weeks watching prices (and not see them
change). And I used to work for online travel agencies. No, this is not true.
Every person who claims it is true says "I watched the prices, and waited,
then when I bought the ticket it was more expensive." Completely ignoring the
fact that ticket prices generally rise as you approach the time of the flight.
I've seen no evidence that the person would have paid less if they used
incognito mode. I've also never seen a different (well higher price) if I
signed in.

