While anyone who has ever tried to book a flight at the last minute has also had a chance to see how demand will affect the cost of the ticket, the strategy of “dynamic pricing” is now being talked about more openly by airlines — at least when it comes to loyalty miles and perks.
American Airlines (AAL) recently added route demand to determine the number of miles it will take for a free flight through its AAdvantage loyalty program while JetBlue Airways (JBLU) added peak pricing to its rules for check-in bags (those traveling during peak dates need to pay $50 for the first checked bag instead of $45).
Related: JetBlue promises not to make this key thing more expensive
London-based Virgin Atlantic just became the latest to announce a miles redemption plan that will “vary in line with demand.”
Virgin to travelers: Pricing to ‘vary in line with demand’
"Flying Club members will be able to use Virgin Points to pay for any seat on the plane on any date, offering absolute choice and flexibility for our loyal customers," Virgin said in its announcement press release. "The price of seats will vary in line with demand, in a similar way to standard tickets."
More Travel:
- A new travel term is taking over the internet (and reaching airlines and hotels)
- The 10 best airline stocks to buy now
- Airlines see a new kind of traveler at the front of the plane
The changes, which include a revamp of the airline’s Flying Club loyalty program to make any seat on a Virgin flight available for buying with points, comes into effect on Oct. 30. For the last two years, the airline launched by Richard Branson in 1984 would reserve at least 12 seats on each flight for points purchases and keep the rest open for customers paying cash.
While Virgin is positioning this as being able to offer “some of our lowest ever prices in points” (with a flight between London and New York sold for 6,000 Virgin Points used as an example), this comes with the clarification that there will be a “new Saver reward seat product” which allows the airline to make it subject to availability while charging higher points prices for other flights as well as raising them on a whim if demand is high.
Related: Get the best cruise tips, deals, and news on the ships from our expert cruiser
Virgin says its customers ‘mean the world’ (here is what that actually means for you)
“Our loyal Flying Club members are so important to us, and today’s announcement is not only a first for the UK, but a significant step further in offering them as much choice, value and flexibility as possible,” Virgin Atlantic’s Chief Experience Officer Siobhan Fitzpatrick said in a statement.
Other executives also reiterated phrases about how the changes will allow for “greater flexibility” and that Virgin’s travelers “mean the world” to the airline but the two words “dynamic pricing” remain the most crucial in the latest announcement.
While dynamic pricing is a more modern term for the age-old practice of raising pricing when there is high demand, airlines are now also increasing using artificial intelligence to judge which flights to raise both for points and regular buyers.
Delta Air Lines (DAL) CEO Ed Bastian recently gave a conference speech in which he also mentioned how “billions of dollars of opportunity” lie in the use of “digital and AI” to monitor pricing.
Related: Veteran fund manager sees world of pain coming for stocks
