If you’ve ever lived abroad for a while, you might have stumbled across a price discrepancy for which there seems to be no valid reason. Airline ticket prices on certain routes are lower than they are if they’re purchased here — but try to buy one, and you’re out of luck.
Sharon Peterson wondered about that. Specifically, she questioned price differences on air fares between the US version of Expedia and its UK edition. Intra-European tickets, she notes, are far cheaper on Expedia UK than on its American counterpart. What’s with that?
“Why does an American have to pay more for the same travel between countries over here than a British person or a French person?” she wonders. “And when I’m in the UK, why does Expedia have to threaten me that I have to use the UK Web site every time I sign on to my computer?”
Good question.
I asked Expedia spokeswoman Katie Deines to answer. Here’s what she said:
There are a number of factors that could result in travel pricing variances between geographies. These could include currency conversion, airline capacity, and the dynamic nature of travel pricing in general.
It might be similar to what you’d find if you searched for different products on multiple Amazon sites, or to the difference in the price of a shirt you buy at the Gap in New York vs. the Gap in Tokyo.
Before I go further, it’s important to note that Expedia does not set airfares – the airlines do, and would probably be a better source for explanation of the dynamics that influence pricing across international geographies.
That said, different airfares have different terms and restrictions. For example, a fare sold in the UK might have a specific stipulation in the fare terms that it can only be sold in the UK. International airlines may have higher fares from points of sales outside of their home market, perhaps because outside the home market the airline’s competitive low-cost carriers are not as easily accessible.
Also, in order to make a purchase on any given point of sale, a customer would require a credit card that is tied to an address in the respective country. It’s a fairly universal fraud reduction measure for Internet retailers.
As it pertains to Expedia, each of our points of sale typically offers certain fares negotiated specifically for that market and intended by the supplier for travelers located in the local geography. We want our customers in each of the geographies we serve to have the most relevant selection and experience for them.
The general rule is that the travel selection on each Expedia point of sale is catered specifically to travelers accessing the site from that market, which is why Ms. Peterson is directed to the UK site when accessing it from a UK IP address. She should be able to access the US site just as easily, however, and if she has a credit card tied to a US address, she has the ability to book travel on Expedia.com or Expedia.co.uk according to which best fits her needs for the trip at hand.
In other words, Sharon, not only do the airlines make travel agents do it. They also place these restrictions on themselves to prevent fraudulent purchases.
Here’s my take: I think these rules are benefiting no one but the airline or travel supplier in question. If you take the potential for credit-card out of the equation, you’re left with an inescapable conclusion — that this is a money grab.
I don’t fault Expedia, or any other online agency, for this. It’s the travel companies that are responsible.
So Sharon, if you can find a way around these silly restrictions, go for it.
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Chris, airlines have had different prices based on country of origination for as long as I’ve seen (since the early 90s at least). Way before credit card fraud, so that’s a straw man. Other factors, such as exchange rates, are of minimal effect.
When I questioned it with an airline rep (yes, they used to exist!) I was told it was simple pricing based on market forces. Americans are typically thought of as having more cash so that NYC-LON-NYC ticket will cost more in the US than when purchased in, say, Romania. Analogous to the dual economies of Jamaica and other countries.
When online selling became popular, the GDS systems were simply adapted with a front end, but the pricing games continued and that’s where we are today.
Plain and simple it’s simply another airline practice akin to hidden cities and other “rules” which they have imposed. Unilaterally, of course, but that’s their perogative.
…Phil
…Anthony, FL
I noticed the same thing about 5 years ago, I think this is one of the Airlines dirty secrets, When I was traveling back and forth between Austin and Stockholm in 2001, my tickets were initally purchased thru our company corp. travel dept. and charged to our travel budget, but as soon as this was passed on to the customer, The customer insisted on arranging and purchasing the tickets from Stockholm because they were roughly 1000$ cheaper per round trip. Making about 10 trips in 18 months, this was a significant savings.
So when I asked my swedish colleagues about this, it was clear to me, that they knew that it was cheaper for them to buy the tickets thru a local travel agent, then it was for me or our corp travel dept… So, maybe Americans are just willing to pay more, so the Airlines price tickets purchased Domestically accordingly.
I certainly don’t buy the argument from Expedia rep, about the variances, I can understand some variances, but this is out and out gouging in my anecdotal experience.
-Skip
This is capitalism at its best. You charge what the market will bear. Why does one person pay $200 for a flight and his seatmate pays $1200?
There are no laws requiring you to sell a product at the same price to different customers. If you buy a pair of jeans, you likely can get the same pair in Macy’s and also at Nordstrom’s. I guarantee that Macy’s will be less expensive. Similarly, buying them in NEw York will likely be more expensive than buying them in Minot, ND.
John,
I would not disagree that there are capitalist forces at work here, However, I respectfully disagree with your analogy… I would say in the example above, the American consumer is not allowed to go to Macy’s to buy their jeans, but is being forced to go to Nordstrom’s.
There is something wrong with that.
-Skip
It’s not just the airlines. It is the car rental agencies too. Go the Hertz (or Avis, or any other car rental company) website, and your selection of your country of residence directly (and often highly significantly, sometimes to the tune of over 70%) impacts the pricing you will get for the same car, rented from the same location, for the same dates and the same rental period.
This practice is a crock. I planned to fly from Bangkok to Dalas and back earlier this year, and wasn’t all that happy with the far my Bangkok [where I live] travel agent quoted me of about US$1,600 return on my preferred carrier at my preferred class. So I went to some of the big-name online companies.
The *cheapest* I found was over US$2,200. And even an economy ticket went all the way up to more than a stunning US$7,600.
Called my travel agent, widened my travel windows, and said any airline, economy class.
She came back with a return fare of about US$970.
I’ve “never* found a decent fare from those sites, which I won’t name because I don’t want to face the possibility of getting dragged into court. But I will never give any of them any business so long as they advertise, falsely, best fares — and I happen to be in a situation where I *often* have the opportunity to encourage others not to do so.
The airline’s explanation in your story is largely poppycock. While I don’t have anywhere near your contacts, I do have close friends in the airline industry, and they privately agree with me.
In some cases, it has to do with the taxes paid by the airline and which country it is based in. I fly regularly to a certain country in Asia. With any U.S. airline, the taxes amount to $220 but using the flag carrier of the Asian country, the taxes are only $80.