It is a universally relatable experience for travellers in India: a flight from Delhi to Mumbai is checked on a booking app, showing a fare of ₹5,500. After a 15-minute coordination with family, the traveller returns to the app, only to find the same flight now costs ₹7,200. This often feels like a targeted and personal penalty, as if the system is watching and reacting to individual searches.
This phenomenon, however, is not random, nor is it (for the most part) a conspiracy. It is the result of a high-speed, automated system known as Dynamic Pricing.
Airlines operate with a clear objective: to sell every single seat on an aircraft for the highest possible price that the market will bear at any given moment.
This guide will demystify the “black box” of airline pricing. It will explain the technology that drives the constant changes, the specific factors in the Indian market that contribute to such extreme volatility, debunk common myths, and provide a set of practical strategies for travellers to navigate this system.
How Dynamic Pricing Works
Understanding the fundamental mechanics of airline dynamic pricing is the first step. These global systems are the foundation upon which Indian market volatility is built.
What is Dynamic Pricing?
The core of airline pricing is not a single “algorithm” but a complex Revenue Management System (RMS). This is the central “brain” that airlines have been using and refining since the 1980s. The primary function of an RMS is “yield management”—the science of maximizing revenue (yield) from a fixed, perishable asset (a plane seat that becomes worthless after the door closes).
This RMS “thinks” 24/7, constantly processing vast amounts of data to decide the price of a seat at any specific second.
The key inputs include:
1. Supply and Demand (Historical): The system knows how many seats are on the flight and how quickly that specific flight (e.g., the 9 AM Delhi-Mumbai) has filled up in the past—last year, last month, and last week.
2. Supply and Demand (Real-Time): It monitors how many seats are left right now and how many people are currently searching for this route on the airline’s own systems and partner channels.
3. Time to Departure: The price will differ significantly based on whether the booking is 3 months or 3 days away from the flight date.
4. Competitor Pricing: The RMS is in a constant state of surveillance, scraping competitor websites to see what IndiGo, Air India, and others are charging for the same route, and adjusting accordingly.
5. Contextual Factors: The system is “aware” of external events. It knows if there is a long weekend, a major cricket match in Mumbai, or if school vacations are starting.
The “every minute” change that travellers now observe is, in fact, a key feature of modern technology. While airline pricing has been “dynamic” since the 1980s, the old system was “constrained” by a maximum of 26 “booking classes” and required airlines to file fares with third-party systems, making changes slower.
Today’s technology, particularly the evolution into Continuous Pricing, has removed these constraints. Airlines can now adjust prices in real-time without filing fares. Continuous Pricing allows for “indefinite price points,” meaning that instead of just 26 possible prices, the algorithm can create thousands of granular price points (e.g., ₹4,550, ₹4,560, ₹4,575) to perfectly match the supply-and-demand curve at any given second. This technological leap is the literal engine behind the “every minute” fluctuation.
Why Your Ticket Price Suddenly Jumps?
To understand airline pricing, one must think of an aeroplane not as one large cabin with a single price, but as a series of 10-15 dabbas (compartments), similar to a train. Each dabba is a “fare bucket” or “fare class”. Every seat, even if physically identical, is assigned to one of these buckets, each with its own price and set of rules.
Airlines use the letters of the alphabet (A-Z) to name these buckets.
Full-Fare Classes: These are the most expensive, flexible tickets. Examples include ‘Y’ for a full-fare Economy ticket, ‘J’ for full-fare Business, and ‘F’ for full-fare First Class.
Discounted Classes: The cheapest tickets are in buckets with letters like ‘Q’, ‘V’, ‘N’, ‘L’, or ‘B’. Each has different rules; for example, a ‘B’ class ticket might be “Basic Economy” with no included baggage and strict no-change policies, while a ‘Y’ class ticket is fully refundable.
This system is what causes the sudden, large “jumps” in price. The process works as follows:
The airline’s RMS opens the cheapest bucket first (e.g., ‘Q’ class) with 10 seats available for ₹4,000.
Ten different travellers book these 10 seats.
The ‘Q’ bucket is now “Sold Out”.
The instant the 10th seat is sold, the RMS automatically closes the ‘Q’ bucket. It then makes the next cheapest bucket (e.g., ‘V’ class) available, which is priced at ₹5,200.
The traveller who was watching the ₹4,000 price did not have the price “increased on them.” Rather, the cheap inventory sold out, and the system revealed the next available, higher price point.
This reveals that there are two distinct types of price changes happening simultaneously.
The “Bucket Jump” (The Big Leap): This is the traditional system. When a fare bucket sells out, the price jumps discretely and significantly (e.g., ₹4,000 to ₹5,200).
The “Continuous Fluctuation” (The Small Shiver): This is the new system. The RMS is also minutely adjusting the price of the entire bucket in real-time. For example, it might change the ‘Q’ bucket from ₹4,000 to ₹4,025 based on competitor moves, and then to ₹3,990 during a low-demand hour.
The “every minute” change is the continuous fluctuation, while the “how did it jump ₹2,000?!” change is the bucket jump. The Indian traveller is experiencing both of these simultaneously.
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