Dynamic Pricing Just Drove Your Hawaii Airline Ticket Sky-High

A friend was looking to book a Hawaii flight this week. They looked once, but the next time they looked, just hours later, the price had gone up dramatically. So what gives?

We came to believe there was a prevailing price when buying flights to Hawaii or elsewhere, and at one point in time, that was true. Now, however, the world, together with airlines flying to Hawaii, vacation rentals and Hawaii hotels, too, employ sophisticated dynamic pricing of their inventory.

Read on for some of the things you can do to prevent this from raising your Hawaii airline tickets even further.

What it comes down to is this: pricing of flights to Hawaii is based on contextual signals.

Airlines don’t have one price for a flight to Hawaii. They’ve implemented products such as Architect to help refine their “revenue management.” We know these products well, and are addressing them today from the viewpoint of the consumer. We want you to understand what is happening, and how you can best manage it from the buyer’s perspective.

Dynamic pricing will yield much higher Hawaii airfares this summer and beyond.

In looking at summer prices for Hawaii airfares, across all of the airlines, we got a dose of sticker shock. Prices are on the climb and are set to return to previous levels and beyond. Honestly, the only thing keeping fares in check at all at this moment, is Southwest Airlines. Their entry into Hawaii flights has remained a disruptor that, to a greater or lesser degree, suppresses Hawaii flight prices. In markets where Southwest flies, you’ll still find up to a 50% suppression in prices. That’s where the best deals are, no matter which airline you choose or which season.

Alaska is just one of the airlines moving to the most sophisticated dynamic pricing. The airline recently announced they have partnered with APTCO, and will use their Architect pricing tool going forward. Airlines can spend less time on fares using such tools, which find the best yields using extensive data about our shopping habits, among other things.

Alaska Airlines’ revenue manager Kirsten Amrine said, “When ATPCO showed us the capabilities of Architect, we saw a clear vision that aligned with the way Alaska Airlines imagines the future of pricing management. Architect’s capabilities enable us to be even more strategic, and we are taking advantage of the efficiencies Architect offers to unlock the full revenue potential of our network and pricing strategy.”

Pricing of flights to Hawaii before dynamic pricing.

Airlines used to use what’s termed “static pricing.” Airlines created fare structures containing a limited number of prices, which were then widely published. With static pricing, the fare from Los Angeles to Honolulu remained relatively static, at least for a certain number of hours or days. Flights from Honolulu to Los Angeles, on the other hand, wouldn’t necessarily be priced the same, even with static pricing. Variability existed with static pricing for seasonality, nonstop versus with stops, days of the week, and other factors.

Enter dynamic pricing on flights to Hawaii.

With data-driven dynamic pricing technology, and tools such as Architect, airlines can thoroughly analyze the competitive environment, and use constantly changing actionable analytic data to segment pricing granularly. These tools are now deemed imperative for airlines, hotels and vacation rentals to remain competitive and achieve maximum profitability.

Real-time pricing changes to adapt to current market conditions.

With dynamic pricing, the cost of your flight to Hawaii is in a constant state of flux. The airlines evaluate competitor pricing, events and other things causing spikes in inquiries, your personal searching and booking patterns, and so much more, to determine and show you “your price.”

Airlines selling flights to Hawaii want to sell the most seats at the highest possible price.

To determine what prices they can charge, airlines dig into the nuances of passengers’ online purchasing behavior and greater market demand.

Ancillary charges will also now be dynamically priced.

The airlines reap more than $50 billion annually on these extra charges that can include baggage, seat selection, meals, internet, and more, depending on the airline. These fees are ever escalating, as you’re well aware. The problem for airlines is that until recently, these products were managed separately, outside revenue management. Therefore, they’ve been offered using static pricing without regard to who the customer is or the circumstances of their purchase.

The industry is now moving to an approach they call continuous or total dynamic pricing.

Continuous pricing is the ultimate method of adjusting prices in real-time based on contextual signals. IATA has named it “Dynamic Offers” and this is becoming the new standard for pricing with its holistic approach to revenue management and greatly improved demand forecasting and personalization.

Using artificial intelligence and machine learning.

These advanced technologies are where the travel industry is headed. It’ll bring with it an attempt to closely match pricing and offers to exactly what contextual  data reveals are the customer’s hot buttons. This will increase purchases while contouring offers just to what a customer might want, and either adding or eliminating options as indicated. Airlines will also know from your shopping experience whether, for example, you’d be open to an insurance offer, or a car rental or accommodation, purchased together with your Hawaii airfare.

Hawaii tickets vs. Hawaii offers: the new Hawaii packages.

A new product amalgamation is forthcoming for Hawaii-bound visitors and elsewhere, and that’s called offer management. Think of it as the next generation of Hawaii packages, if you will, but on steroids. The idea is to present to the potential buyer the exact mix of products at the most likely price to be accepted on the spot based on that particular user. The offers may consist of both basic services, together with options deemed appropriate, which we can then either accept or reject. And guess what, based on whether we buy or don’t buy, the airlines will then adjust the next offer accordingly.

What happened to airlines filing specific Hawaii airfares?

Airlines are moving to either increase the number of Hawaii airfare price points or to make them virtually unlimited. This is being called Dual RDB as proposed by ATPCO. It makes it easy for airlines to increase their options for pricing without requiring changes to scheduled filings. Fare filings are becoming automatic using this system.

How close are we to total dynamic pricing?

We’re nearly there. Going into 2022, airlines were slow to move from their traditional fare distribution systems. But as can be seen by Alaska Airlines’ partnership with Architect, times are changing quickly.

Tips we use and suggest to others to avoid higher than necessary Hawaii airfares.

First, always keep in mind that your browser contains a plethora of information about you. Sometimes that is very helpful, but in this case it can work against you.

Try using a “fresh browser,” one you never have used, or using your browser in the “incognito” mode. Google says, “In Incognito, none of your browsing history, cookies and site data, or information entered in forms are saved on your device. This means your activity doesn’t show up in your Chrome browser history, so people who also use your device won’t see your activity.”

Try using a VPN to appear to be in another country. We’ve used this trick before and it’s worked in multiple ways. You can appear to be in the UK when purchasing your flight from Los Angeles to Hawaii, for example. That’s done by using a VPN (virtual private network) on your phone or computer, then selecting a location other than the U.S.

Sometimes it works best to purchase when you first look at the ticket. When the price has risen the next time you look, consider waiting. We’ve had the experience of not purchasing on the rise in price, and then seeing it drop back down in the next day or two.