Modern Australian
Men's Weekly

.

Why you might be paying more for your airfare than the person seated next to you

  • Written by Rob Nicholls, Senior lecturer in Business Law, UNSW
Why you might be paying more for your airfare than the person seated next to you

Price discrimination is legal in Australia where sellers will typically pick an opening price based on the likelihood that someone will pay it. We take a look at how you can get the best deal on airfares in the second part of a series exploring how technology is changing tourism.

Few things are more annoying than spending a large sum of money on a purchase, only to discover that someone else got the same thing for a lower price. This often happens with airfares. You go the same website, search the same airline, choose the same seat row and fare conditions, but you’re offered a different price depending on when and where you do it. Why?

Often it’s a result of price discrimination. This happens when a seller charges you what you’re willing to pay. Of course, it also needs to be at a level that the seller is willing to accept.

When it comes to airfares, there are two levels of price discrimination, both driven by algorithms. First, there is price discrimination by the airline. Airline pricing is typically dynamic. That is, the prices are higher for more popular flights. Then there are intermediary platforms, such as travel agents or price comparison websites, which can introduce a further level of price discrimination.

Read more: Longing for the 'golden age' of air travel? Be careful what you wish for

How it works

Websites create cookies that record interactions between a user and a website. Often there are other tags and beacons created. From these, the website provider can obtain information, such as the browser type and the kind of device being used. Flight sales providers use this information to determine the price offered to a customer.

For example, if the same user checks a website multiple times for a flight at a specific time and on a particular date, the provider might assume this is the only time and date the user is interested in. It might respond by increasing the price offered, since it knows the travel decision is made. Alternatively, it might reduce the price to lock in the customer.

Clearing cookies or using a search engine that does not share search history (such as Duck Duck Go) can reduce this effect.

Price discrimination is legal

In Australia, like in many countries, price discrimination is legal. Sellers will typically pick an opening price based on the likelihood that someone will pay it. You see this happen at garage sales. Indeed, perfect price discrimination may mean that no two people pay the same price for the same product or service.

There are a few different ways of thinking about this.

In one sense, this is just how markets operate. If both buyers and sellers operate in a self-interested manner, efficient outcomes arise that are better for everyone – it’s the “invisible hand”. Of course, this doesn’t prevent people from feeling ripped off.

Read more: Explainer: fuel hedging and its impact on airlines and airfares

The market can also provide intermediaries. Instead of paying the airline’s asking price, you could get an intermediary to buy the fare for you at a lower price. After all, you might not mind paying more than the minimum price available, provided that it’s less than you thought was reasonable to start off with. In airline searches, this is the type of service offered by businesses such as SkyScanner.

Limitations

There is a legal issue which limits the use of price discrimination – such as if a seller engages in actual discrimination. If a website discriminates against an identifiable group, for example by charging more to women with an Italian surname, it would risk being in breach of the Racial Discrimination Act.

Another limitation is the potential for social media backlash against the practice, which could lead to reputational harm. In the retail space, Amazon issued a statement denying that it engages in price discrimination, after angry customers found they had been charged different prices for the same product. Platforms engaged specifically in airline sales haven’t disclosed whether or not they engage in price discrimination, but they are likely at risk of similar customer backlash.

Read more: So when should you book that flight? The truth on airline prices

In the end, if you want to get a better deal on your airfare, the answer is still to shop around. And using comparison services, clearing cookies from you browser cache, and leaving as few breadcrumbs as possible is likely to yield the best deals.

Authors: Rob Nicholls, Senior lecturer in Business Law, UNSW

Read more http://theconversation.com/why-you-might-be-paying-more-for-your-airfare-than-the-person-seated-next-to-you-100959

Seamless Business Relocations Made Easy with Office Movers in Gold Coast

Relocating an office is a complex process that requires careful planning, coordination, and execution. From moving delicate electronics to arranging f...

DIY Air Conditioning Risks & How to Avoid Costly Repairs

When the scorching Queensland heat kicks in, the urge to grab a screwdriver and tackle your air conditioner fix to yourself is totally understandable...

WooCommerce Website Designer: Building High-Performance Online Stores That Drive Sales

A WooCommerce website designer plays a crucial role in helping businesses create high-performing, visually appealing, and conversion-focused online...

The Importance of Dogging Courses in Australia: How to Get Your Dogman Ticket

In Australia’s construction, mining, and industrial sectors, safety and technical competence are essential for any worker handling heavy loads and l...

Beyond the Hype: Why Breitling Speaks to the Modern Watch Collector

There’s a point every collector reaches when the chase for the latest release gives way to a deeper appreciation for quality. The thrill of new mode...

Elevate your Perth workspace: Sleek tech with managed IT Services

In today's fast-paced business environment, having a reliable and efficient IT infrastructure is no longer a luxury, it's a necessity. For businesse...

7 Ways a Luxury Australian Cruise Transforms Your Travel Expectations

Dreaming of your next holiday? Forget the crowded tourist traps and consider something truly special: a luxury australian cruise. More than just a ...

How Polycarbonate Became the Backbone of Modern Australian Design

The design landscape in Australia has been audacious, innovative and climate-conscious at all times. Design in this area is all about striking a balan...

Affordable Invisalign in Bangkok Why Australians Are Choosing Thailand

More Australians are investing in Invisalign to straighten their teeth, but the treatment in Australia can cost thousands of dollars and often takes m...

Designing a Tranquil Oasis in Your Backyard

Nothing beats a warm summer evening spent in a gorgeous backyard. The backyard is the perfect space to unwind and spend some of the most magical momen...

How a Well-Designed Gym Can Improve Your Performance

Have you ever entered a gym that just feels off and couldn’t focus on your workout? Maybe it’s the layout that was weird, or the lack of natural l...

Wellness Checkups at Work: Key to Employee Happiness and Higher Output

Employee wellness programs are reshaping how companies think about productivity and satisfaction. When people feel healthy, they perform better, sta...

Experience the Elegance of Plantation Shutter Blinds: Enhance Your Décor Today

When it comes to elevating your home’s interior, few window treatments combine sophistication and practicality as effortlessly as plantation shutter...

Common Questions Women Are Afraid to Ask Their Gynaecologist (and Honest Answers)

Visiting your gynaecologist isn’t always easy. Even though reproductive and sexual health are essential parts of overall wellbeing, many women fee...

Designing Homes for Coastal Climates – How to Handle Salt, Humidity, and Strong Winds in Building Materials

Living by the ocean is a dream for many Australians, offering breathtaking views, refreshing sea breezes, and a relaxed lifestyle that’s hard to b...

This OT Week, Australia’s occupational therapists are done staying quiet

Occupational Therapy Week is typically a time to celebrate the difference occupational therapists make in people’s lives. But this year, many sa...

Melbourne EMDR Clinic Sees Growing Interest in Patients with Depression

Depression is a common mental health condition affecting around 1 in 7 Australians. It is typically diagnosed when an individual has experienced a p...

Proactive approaches to mental wellbeing

Life gets busy quickly. For many adults, each week is a constant mix of work commitments, raising kids, managing a household, settling bills, catching...