Understanding Dynamic Award Pricing for Airline Tickets

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All of the legacy U.S. airlines have eliminated award charts and now use a dynamic award pricing system. That phrase means nothing to most customers, so here’s an attempt to explain what airlines are saying and what it means to you, the passenger.

Award charts previously showed what you’d pay for a ticket. The only thing that mattered was availability. Over time, award charts became more complicated, often listing different prices for flights on partner alliance flights. Some airlines even had (and still do have) different charts for each airline.

When U.S. airlines used award charts, they were unable to make award reservations for partners online. Instead, you had to call a representative who would book the flight over the phone. The technology available at the time couldn’t connect all the airline systems and pricing mechanisms. If you were a knowledgeable travel hacker, you could exploit the best features of each program to travel around the world in style with the fewest points possible. The less the representative knew about their own program’s rules, the more you could benefit.

But the good times couldn’t last

Little by little, airlines have found ways to link their booking systems to their award programs. Starting with Delta, airlines eliminated award charts, opting for “dynamic pricing.” Most travel bloggers referred to Delta’s system as “We’ll charge whatever we please for an award ticket, and there’s nothing you can do about it.”

I’m sure other airlines would have liked to follow Delta down this path immediately, but their systems weren’t up to the task. But now, United and American Airlines also offer dynamic pricing for award tickets.

American Airlines posts this chart on its website.

Note that all categories say “starting at” for the price. American AAdvantage can charge more (and occasionally less) than that price. There’s no way to know how many points you’ll need for an award ticket.

Merriam-Webster Dictionary defines dynamic as:

marked by usually continuous and productive activity or change

What airlines mean when they talk about dynamic award pricing is that the prices can change at any time. This isn’t unlike what we’ve come to expect when purchasing airline tickets, and it drives me crazy.

Do all points now have a fixed value?

It’s easy to confuse dynamic pricing with what Southwest and JetBlue do with their award programs. For them, the number of points needed for an award is linked to the ticket price. Isn’t that all the airlines are doing now?

Mostly no, but sometimes yes.

Southwest and JetBlue’s programs have fixed-value points. You’ll get around the same amount of cash equivalent for a point, no matter the cost of the ticket. So a cheaper ticket costs fewer points, and a more expensive ticket will cost more, but the value of each point stays the same.

If the airline wants to offer a lower award ticket price, it only needs to lower the cash price for everyone. Southwest has occasionally offered lower prices for award bookings, but those are limited-time offers.

So what’s dynamic award pricing?

Dynamic award pricing allows an airline to change prices over two currencies, cash and points. They can offer “sales” for members of their program by lowering the number of miles needed for redemptions while keeping cash prices constant.

I booked a Delta flight for 9,000 SkyMiles, which would have cost $119 in cash. If Delta had been using a static award chart with all domestic one-way flights costing 12,500 miles, I never would have booked an award on that route. So, not having a chart allows Delta (or any other airline) to adjust prices to where people are willing to redeem points.

The downside is there’s no upper limit to how many points an airline can charge for an award. I remember when Delta published an award ticket that cost 1,000,000 SkyMiles. I don’t know who would pay that, but they must have thought someone might. Otherwise, they can still not offer award tickets for a flight.

While dynamic pricing for award tickets makes it harder to find sweet spots, it doesn’t remove them. Airlines can now publish short-term sales for award fares to unload excessive inventory. You just have to be on the lookout and jump when you see them, the same way you would when you see a low airfare.

Airlines are currently developing methods to apply dynamic award pricing to partner awards, aiming for more flexibility in adjusting prices based on supply and demand. This means that award ticket pricing for partner flights may become more variable depending on factors such as demand and seat availability. Despite these changes, there are still opportunities to find deals if you search for award seats on partner airlines.

Final thoughts

The one big problem with dynamic pricing for award tickets is planning. If you’re saving points for a once-in-a-lifetime trip, the airline could double the price of that ticket overnight. You wouldn’t be able to do anything about it. The program would just say the new price is what the market will pay.

The only thing we can do as passengers is be flexible. Maybe we can travel at a different time when the award prices are lower. It might be necessary to book a positioning flight or even a flight in a lower class of service.

We can complain about how much a particular flight used to cost on a non-existent chart, but no one at the company will listen. We’ll have to find new ways to get the most value from our points and miles.

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This post first appeared on Your Mileage May Vary