Understanding how airlines price their fares can be a minefield – and the cost of a ticket can change multiple times per day. This makes it difficult for business travelers to secure the best price, so many corporations pay more than average for travel.
Despite the complexity, we knew that pre-COVID airlines looked at past demand and analytical data to forecast future trends and set their prices. However, COVID-19 has created an unprecedented environment for airlines, and the criteria for pricing have become even more complex.
Extreme and unpredictable price fluctuations will become more common as airlines grapple with sudden border closures, travel quarantines, bankruptcy fears, and flare-ups in COVID cases worldwide. The task of locking in the best fare will therefore become even more difficult for corporations.
This is where airfare price tracking
could become a savior for corporations. Companies like Oversee can track the price of airfares after they’re booked and can cancel and rebook that same flight each time its cost goes down.
Let’s look deeper at why airfare tracking has become so relevant.
Price changes are unpredictable.
Airline pricing is usually based on a variety of scientific models. First, airlines analyze peoples’ motivations to travel, setting the price they believe each traveler persona is willing to pay. They balance this with other factors such as historical data, seasonality, capacity, and competition.
However, airlines can no longer rely on historical data – as there is no historic data for times like these. And no one knows how the models airlines have been using for years will change given the unprecedented and constantly-evolving situation.
Instead, Airlines’ pricing strategies focus on attracting people to travel again while reacting to numerous, highly unpredictable situational changes. As a result, when a company books a flexible ticket without price tracking, it is even more likely to be paying a premium price with no way of knowing.
Cost savings are even more critical to business recovery.
A recent survey found that three-quarters of business travelers expect to travel as much as or more post-COVID than they did pre-COVID. This shows a solid willingness to travel once people feel safe. This may create a sudden influx of travel requests as companies attempt to compensate for business lost throughout the pandemic.
However, many industries have been hit hard by COVID and, while traveling to do business may be crucial to recovery, so is making cost savings. Travel managers will, therefore, need to control the cost of travel. Introducing automated functions, such as airfare tracking, will lower the cost of travel and allow corporations to conduct more trips within their overall T&E budget.
Corporations can benefit from higher volatility.
IATA predicts it could reach 2024 before business travel volumes return to pre-COVID levels. In the meantime, airlines are losing vast sums of money, cutting their routes to bare minimums, and competing on the few remaining profitable courses. Therefore, airline revenue management systems are having trouble setting stable pricing in the short term.
Based on Oversee data, volatility is at its highest in 2020, showing extreme fluctuations in price. This presents an opportunity for companies to benefit from sudden drops in travel costs. However, as this situation is constantly unraveling, securing a fare during a price dip without price tracking is difficult.
Protect against all-time high costs.
We will likely see further airline bankruptcies, leading to decreased competition in some markets. Therefore, many routes could be subject to monopoly pricing, where an airline can increase prices based on reduced supply versus demand. Although other airlines will step in to fill this void, it will likely take some time – travelers will see higher prices in the medium term.
For example, say two airlines fly between Tel Aviv and London. Airline 1 went bust; therefore, Airline 2 increased its prices to tap into continued demand. In two months, Corporation X then book a ticket with Airline 2 for a business meeting. The price is likely to have been “monopolized,” meaning the corporation paid more than it would have before Airline 1’s collapse. However, one month later, Airline 3 seized the opportunity to introduce a Tel Aviv to London route. This increased supply now meets demand again and pushes the price of Airline 2’s tickets back.
In this instance, airfare price tracking could cancel the corporation’s original ticket and rebook it at a lower price, saving it money.