Saturday, September 17, 2011

Complexity and air fare pricing: Houston, we have a problem.

Early in my life air travel was almost as expensive as today. At that time, however, we had travel agents and competitive service. It was hassle free.

Later air travel was inexpensive and hassle free. The world felt smaller.

Then it became complicated -- but travel software made up for lost travel agents. We were ahead of the airlines.

Now, it's not so good. It's not just the security hassles. It's not just that the cost of a Minneapolis to Montreal trip has gone up 20% a year for the past four years (now doubled, Hawaii and Europe are cheaper).

It's also that planning a plane trip has become absurdly complex. Complex like choosing a cell phone plan, getting a "free" preventive care exam, managing a flex spending account, getting a mortgage, choosing health insurance, reading mobile bills, fighting payment denials, or making safe product choices. Complex like the complexity collapse that took down the western world.

I blame it all on cheap computing. Cheap computing made complexity attacks affordable and ubiquitous. [1]

In my most recent experience with information asymmetry I found tickets on US Airways for $490 (1 stop) on both Bing and Kayak. When I added a 2nd traveler, however, the price of both tickets increased by $100. (This was harder to spot on the US Airways site as they list deceptive prices, hiding all the "additional fees" airlines carved out to disguise price increases.)

A bit of research (time is how we pay our complexity tax) revealed this happens when the 1st ticket allegedly uses the last "cheap" seat on a flight. The next ticket costs more, and because airlines are loathe to confess this they increase the price of both. That may be so, but it means there's a great incentive to have a few cheap seats that will attract hits from travel sites, but that will turn into high price tickets for the 2nd passenger. This doesn't even have to be planned, natural selection means this kind of emergent "happy accident" of complexity, once discovered, will be leveraged.

This has costs. Maybe high costs. We pay them either by cash lost to legal frauds, or we pay them in time. I think they have more do with the lesser depression than most admit.

It would probably be cheaper for me to just pay my fraud tax to the airlines, but of course I'm not going quietly. I'm studying the (now obsolete) tricks of the trade [2]

  • Shop Tuesday at 3pm ET
  • Start shopping 3.5 months before departure, buy prior to 14 days
  • Tues, Wed and Sat are cheapest days to fly

[1] In the words of James Galbraith (emphases mine): "... The financial world, as it exists, has nothing to do with the commodity world of real exchange economics with its delicate balance of interacting forces. It is the world of technology at play in the form of quasi mass produced legal instruments of uncontrolled complexity. It is the world of, in other words, of evolutionary specialization in the never ending dance of predator and prey...
[2] Seems like there's opportunity for outsourcing complexity management to a new age travel agent and their equivalent for managing the complex scams of everyday life. I fear, however, that only a few of us realize we need help.

Update: Twelve hours after posting I was able to buy both tickets for a total of $200 less than the Saturday price. Same times and planes. I learned ...

  • Email alerts are worthless. I think they're just a way to harvest email for spam (we live on Planet Chum). Instead I took advantage of a Kayak feature -- they save the last search in a short list on main screen. I refreshed this twice daily. Between Saturday night and Sunday night I was able to get both prices at the listed price.
  • I had to keep referencing the search results Kayak provided. The US Airways site kept substituting the flight I didn't want as the "preferred option". I took me 4 runs to get it right. It's hard to explain what they were doing but to succeed I had to carefully track all the flight numbers.
  • Kayak passed my reservation to US Airways as 2 adults. The flight was 1 adult and 1 child. I suspected I needed the Kayak reference to get the price I wanted. Kayak passes its request through URL parameters (only sort of works) so I edited the URL parameter to 1 adult and 1 child.
  • US Airways makes pointless use of Flash to animate simple result display. This is revealing.
See also:

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