Cagey Consumer


Priceline's Gold Mine

A web site that's trying to compete with Priceline is www.hotwire.com. It's not "name your own price" so you don't have to wait to find out if your bid is accepted, but the tickets offered have almost identical restrictions.
The question is: who gets the gold mine, and who gets the shaft?

Priceline would like its customers to believe that when they "name their own price," Priceline contacts the airlines to see if any will accept their bid. There's no way for the public to know whether this is really what happens, or whether Priceline is merely checking a database of "contract rates" that it has negotiated in advance with various airlines.

What is clear is that the ticket you get from Priceline is worth a lot less than the ticket you buy from the airline or a travel agent at a "published fare" that's found in one of the computerized reservation systems. Here are some reasons why:

No frequent flyer miles.
This probably isn't that big a deal, but the frequent flyer miles you're giving up could be worth up to 25% of the value of a round trip.

Little control over itinerary.
When you bid on tickets through Priceline, you have little control over the time of the flight or the routing. You have to be very flexible to be willing to pay for tickets that may turn out to be at inconvenient times.

Absolutely no changes.
Even when you get a non-refundable non-changeable ticket, you can almost always change the reservation by paying a change fee (typically $75). With most airlines, you can choose to standby for flights on the same day without paying a change fee. But your Priceline ticket is generally worthless if you need to make a change.

Some critics claim that Priceline takes advantage of customers who don't know what the best fares are. Customers may bid too much for tickets because they're not familiar with the range of prices avaiable on a given city pair. Priceline pockets the difference.

It's easy for this to happen because of the irrational pricing system the airlines use, which makes it difficult for customers to find the lowest price.

What's the strategy to use with Priceline? First, remember that a Priceline ticket is no bargain if a change of plans forces you to forfeit the ticket. Then research published and internet airfares to find the best fare. If you're willing to tolerate the fact that you have to accept the itinerary they stick you with, put a bid in on Priceline for some amount less than this. A suggested formula (suggested by the Cagey Consumer) is to offer a price halfway between $75 and the lowest price you've found elsewhere (assuming the price you found is more than $75). Then subtract Priceline's $5 service fee.

For instance, if you've found a fare for $275, halfway between $75 and $275 is $175. Take $5 off, and bid $170. This difference compensates you for the possibility that you'll have to completely forfeit your ticket.

If you've done a good job shopping, chances are slim that your bid will be accepted. Since you now know this from the getgo, you can just avoid wasting your time bidding on Priceline altogether. Instead, if you can't find an acceptable fare using a travel agent or online travel service, consider one of the many agencies with contract rates that publish one-inch ads in the weekly Travel section of most metropolitan newspapers. These same agencies are often able to get reasonable fares when you're unable to make a 7 or 14 day advance purchase.


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Updated October 9, 2000