Has Big Data Driven Down Airline Prices?

Comparison shopping has never been easier than it is in the age of big data. In addition to all the different websites consumers can cross-check for the best deal, marketplace platforms have emerged as a big player in many industries, including air travel. With the number of apps and websites on the market designed to get passengers the cheapest airfare possible, you might assume that big data has had a major impact on the drop in airfares in the last few years. Last summer, an average round trip domestic ticket was coming in at $240 ‘20% less than the average two years before. However, this drop isn’t necessarily all due to the impact of big data on the travel market ‘there are other factors involved as well. Here are some of the top influences on airline ticket prices.

The Impact of Big Data

There are a number of apps and websites up and running to get travelers the best deals on the web. From Skyscanner, which allows users to find the cheapest month to their destination or lets them sort by month to ALL destinations, to Hopper, which allows travelers to track flight prices, there are more ways than ever to leverage data for the cheapest price. However, these apps don’t always mean a loss for airlines, and sometimes allow them to fill seats that might have gone empty. Most of these apps have mobile versions, so travelers can get alerts and jump on flights when they’re cheapest.

Meanwhile, airlines aren’t simply standing by helplessly, watching as consumers snap up the cheapest tickets. There’s an insane amount of data that goes into pricing tickets as well, and airlines work very hard to predict how they can balance getting the best prices for tickets while filling as many seats as possible (or overfilling them, as we have seen in recent months). They use performance measurements to improve their strategy continually, and attempt to maximize revenue with every seat sold.

The Price of Oil

Aside from big data, there are some other factors that have gone into the recent dips in airline pricing. Cheaper fuel has had an immense impact on airfares, representing a win-win for both passengers and airlines. The airlines can adjust prices down without affecting their bottom line, and tickets are more accessible to passengers. Cheap jet fuel has also allowed airlines to add routes that would be unsustainable during times with more expensive fuel prices.

No-Frills Travel

Some airlines are starting to offer lower ticket pricing ‘but these lower prices come at a cost. American Airlines is squeezing more out of its economy seats, cutting legroom by two inches and getting very close to the industry minimum of 28 inches. Cutting those inches allows the airline to add more seats to each jet and increase profit. They’re also rolling out a new basic economy tier, which does not include overhead bin space. These allowances are the norm for ultra-low cost carriers, but the no-frills travel trend seems to be making an impact on more traditional airlines as well. Facing competition from low cost carriers like Spirit, WOW Air, and Norwegian has many other carriers struggling to drop ticket prices in any way they can.

Cheaper Than Ever to Fly

While big data might not be the sole reason airline prices have dropped, it has made shopping for tickets much simpler. Airlines, which used to make flying a luxury experience, have honed in on what passengers want: cheap tickets. With deregulation, the industry became a free-for-all, with airlines trying to grab their share of the market. While passengers may grumble about the loss of amenities and comfort on planes, the reality is that this is what the market has demanded ‘cheaper tickets ‘and the airline industry has responded. The industry faces incredible fluctuation from year to year based on demand, jet fuel, and other factors, so it’s only logical that they try to maximize revenue to please shareholders and weather the lean times. Big data has proven to be a tool for passengers ‘but airlines are leveraging it too.