Interesting Airline Pricing
By David Henderson
I had an interesting experience with airline pricing in the last 2.5 weeks. About 2.5 weeks ago, I got on line with United, the airline I usually use to go to Winnipeg. (From there, I drive 3 hours to Minaki, Ontario.) I wanted to go to Winnipeg on or about July 9.
But I got a surprise. The airline literally wouldn’t let me reserve anything in July. I don’t just mean anything to Winnipeg. I mean anything anywhere. I hadn’t seen that before. You might think that I could reserve first class and pay a ton of money. But no.
So I figured that I didn’t really need to fly out of Monterey. I could take a shuttle to SFO, fly Delta to Minneapolis, and then connect to Winnipeg. So I got on Delta’s site. When I put in the details, it had no flights to MSP connecting to Winnipeg.
Then I went to Expedia and voila: I found a reasonably priced flight, about $550, and a reasonable time to leave and arrive in Winnipeg.
Expedia allowed a full refund if I cancelled within 24 hours. So I reserved and the next day decided to go ahead.
Then, a few days later, after a long discussion with my wife, I decided not to go. (Because of Prime Minister Donald J. Trudeau’s travel restrictions, he couldn’t keep me, a Canadian, out of Canada, but he could insist that I go for at least 15 days and quarantine for 14 of them. It would have been very hard for my wife to have me gone that long.) I made that decision after the 24-hour period and so I canceled, leaving about $550 “in the bank” for a future flight on Delta.
So here’s what I think happened. Delta has a 100% refund policy for its seats. But with people’s travel plans so up in the air, so to speak, Delta realized that with lots of cancellations it could have a tiny revenue stream. So it achieved some revenue stability by selling a higher than usual percent of seats to Expedia, which has no 100% refund policy. Delta could keep its reputation for refunds. Expedia, which is one of many resellers and doesn’t have the same incentive to establish a reputation for refunds (and is upfront about the fact of no refunds) makes some money as well.
I have no upset about this. I just find it fascinating.