
Testing for common sense violation in airline pricing - kachnuv_ocasek
http://arxiv.org/abs/1509.05382
======
ColinWright
Some of these violations are common and ubiquitous. It's been well-known for
decades that the UK train fares are not a metric, for a time even failing all
three properties:

* Splitting tickets at an intermediate station sometimes reduced the total fare, so p(A,B)+p(B,C)<p(A,C);

* Reverse journeys are not always the same price, so p(A,B)!=p(B,A); and

* For a time it was necessary to purchase a platform ticket to enter the station proper, so p(A,A)!=0.

Even now I save thousands of pounds a year by finding optimal split ticket
journeys, some of which take (partial) advantage of advance fare discounts.

So I'm not surprised, and no longer think of common sense as something to be
expected from fare structures.

~~~
ghshephard
I've always found it interesting how round trips in one direction cost
different than round trips in the other. I.E. p(A,B,A) != p(B,A,B). For
example, I booked a trip October 2nd to Oct 17th from Singapore to San
Francisco.

On United,

    
    
      $1170 - SFO UA 869,UA 895 -> SING UA 896, UA 862-> SFO
      $1690 - SING UA 896, UA 862 -> SFO UA 875, UA 7991 -> SING
    

I guess it makes sense that travel in one direction on certain days might be
more significant than the other, But I find the $500 difference (almost 50%
increase) to be pretty impressive.

I waited a few days, and re-ticketed again, and the price dropped from $1690
to $1463 - so that's also odd.

~~~
CaptainZapp
That's quite common within Europe, where a ticket from Warsaw to Zurich can be
significantly cheaper than into the other direction.

In this case it makes a modicum of sense. Chalk it up to differences in
purchasing power.

    
    
      I waited a few days, and re-ticketed again, and the price dropped from $1690 to $1463 - so that's also odd.
    

Not really. Airline pricing is very much based on mathematical models. When
the system determines that the flight won't be sold for $1690 it lowers the
price.

The trick is to fill every seat on the plane as expensively as possible, but
not to leave any empty seats. Check out this article for details
[https://en.wikipedia.org/wiki/Yield_management](https://en.wikipedia.org/wiki/Yield_management)
.

In principle: There is no product going stale faster than an empty seat on a
plane after the doors close.

~~~
netrus
OT: it drives me crazy that yield management is not applied to events. If you
have only sold half the tickets for your concert, reduce the remaining
tickets. hn, do something!

~~~
notahacker
If they did yield management properly at events which tend to sell out they'd
also be able to capture ticket scalpers' potential profits rather than
attempting overly elaborate ID schemes to prevent ticket resale. Not sure that
many people would be thankful for higher ticket prices, but some of them might
prefer that rather than having to buy tickets within an hour of them going on
sale via a booking platform that struggles to cope with the traffic spike.

------
paulsutter
"Common sense" tells us that air ticket pricing will be heavily optimized to
maximize airline yield and that no effort is made to conform to any naive
buyer conveniences or expectations. Although the data is interesting, the
premise of this paper is a little weird.

~~~
bengali3
Agreed, I think the assumption that ticket price is somehow related to cost is
the violation here.

------
aeijdenberg
The article looks at common sense from the passenger point of view, but in
fact if you look at it from an airline point of view you can sometimes see a
very different picture.

For example, take the following 2 principles, each of which make sense
individually:

1\. A non-stop product from A to B is a superior to a one-stop product from A
to B. Therefore, A to B non-stop is priced higher.

2\. If only one airline has a non-stop product from A to B, they will price it
higher than if multiple airlines have a non-stop product from A to B.

Let's see how this can play out in practice:

If many airlines can offer a one-stop product from A->B, your airline will
offer it cheaply to compete. It may just so happen, as an implementation
detail, that your product happens to connect at C since that's your hub.

Now, if you look at the A->C market, you may have the only non-stop product,
and thus you price it high.

Result, your price for an itinerary (remember the actual itinerary is an
implementation detail of the A->B one-stop product you purchased) from A->C->B
is priced much lower than the person sitting next to you that is travelling
from A->C only, even though the direct fuel cost to the airline of A->C->B is
clearly higher than A->C only.

------
imechura
I'm curious how this was funded. If the authors had asked most anyone involved
in Airline reservation management they would have told them this plain and
simple as it is no secret. Yield management and airline network dynamics are
just some of the drivers for these "common sense violations".

Also just to correct another comment on how often fares change. For
international flights airlines can publish new fares to ATPCO up to 10 times
per day however with newer pricing strategies/technologies such as bid-price
the fares can change to meet the demand curve in near realtime.

Airline pricing and revenue management is a very complex and interesting topic
that has always pushed the envelope of technology and business management.
There is a reason why google purchased ITA. I was really excited to see a
paper on the topic post on HN but in the end this study has very little
substance to add to the many bodies of work out there.

------
neves
Nice, now how can I use it to get a better fare?

I see that I should: * search for the round trip even if I go in just one
direction * try to buy each connection separately if I have time to spare
(maybe using multicity).

Any more tips? Is there a nice system that would automate it for me?

~~~
redblacktree
Here you go: [https://skiplagged.com/](https://skiplagged.com/)

That site is based around booking flights with a connection at your
destination and skipping the rest of the trip. Just remember not to check any
bags!

Edit: It's called a "hidden city" fare.

~~~
mjn
Two other caveats:

Don't book a round-trip ticket like this, only one-way. The airline will
usually cancel the return ticket if you skip part of the outgoing one.

Don't book on an airline where you have frequent-flyer miles you want to keep.
In the past few years they're cracking down more by cancelling the accounts of
people who use booking tricks that violate their policy.

~~~
rndstr
> The airline will usually cancel the return ticket if you skip part of the
> outgoing one.

I recently did just that, buy a round-trip ticket with a stopover where on the
way out I skipped the last leg. The return leg wasn't cancelled. I would've
been furious if that happened, I paid for that and basically saved them money
on the skipped leg.

~~~
mjn
I'd guess you either got lucky then, or it didn't look suspicious to them
(e.g. your first time doing it, or there wasn't a huge fare difference from
the ticket you "should've" bought). It used to be easy to use this trick, but
airlines much more often cancel itineraries if you skip a portion now, since
the contract terms specifically ban "hidden-city ticketing" and "throwaway
ticketing". Was a bit of a brouhaha a few years ago at flyertalk when it
started happening. But of course airlines don't disclose what exactly triggers
enforcement.

------
kaffeemitsahne
"Testing for common sense violation" is the best thing I've read in a paper
title in a while.

