I just flew back from Japan to the USA. Booking air travel these days feels like navigating a maze of hidden fees, upsells, and manipulative tactics. There was a time when airline companies offered checked bags, seat selection, and in-flight meals for free. Now, you encounter more fare classes, numerous optional add-ons (which often feel mandatory), and constant prompts to get more money from you.
Ironically, while the booking process has become more painful for passengers, global airline revenue has increased by over 50% in the last 10 years. This growth is largely attributed to add-ons such as luggage fees, seat selection, and early check-in options.
Budget airlines like Spirit generate approximately 10-20% of their revenue from baggage and seat selection fees. Even major carriers like All Nippon Airways, Delta, and United earn about 5% of their revenue from these additional charges.
So what are the tricks?
To maximize profit, airline companies not only turn every service into an add-on but also use psychological principles throughout the booking process to influence our flight purchasing decisions.
Trick #1: Loss Aversion
“Avoid middle seat for just $35 more”
As humans, we hate losses more than we love wins.
More and more airline companies are utilizing strategic messaging to influence customers. Messages like “avoid middle seats,” “avoid slow boarding,” or “you’ll pay more for luggage later” create the impression that customers are not just paying extra for add-ons, but are instead investing to avoid discomfort during their flight.
United Airlines serves as a notable example of this practice. When you select the cheapest fare, a pop-up appears, highlighting the disadvantages of the basic fare. To proceed with your purchase, you must check a box confirming that you acknowledge how unfavorable the option is before you can continue to the checkout. This raises questions about the morality of this approach and why they even offer such a poor option in the first place.
Different ways of presenting offers can activate our brain’s loss aversion system, leading us to believe that by spending just a little more, we can significantly avoid inconvenience. However, if you examine the offers closely, you may find that the differences are minimal.
Take the example from United Airlines: by choosing Economy instead of Basic Economy, you receive:
- The same cabin/class.
- The option to select a “complimentary seat,” but this is subject to availability.
- The ability to sit with your group or family, again only if seats are available.
- Permission to bring a carry-on bag on board, but only if there is enough space in the cabin.
- The option to change your flight, though additional fees still apply.
- Premier credits, which may not be relevant to most travelers.
In summary, the differences between the two offers are not substantial, yet United Airlines can charge you almost $100 extra for this option.
Trick #2: Decoy Effect
Choose from: Basic $200 / Standard $260 / Flex $700
If you have ever visited Starbucks, you’ll know that they categorize their cup sizes as Tall, Grande, and Venti.
I used to always choose a Venti whenever I bought coffee from Starbucks. I preferred it because the Tall (Small) cup looked very small, and the price difference between Grande (Medium) and Venti (Large) was only a few cents. This made me feel like opting for a Venti was a better deal—until I realized that it was just Starbucks using psychological tricks on me.
The Decoy Effect is a psychological bias that occurs when the presence of a third, often less appealing option, influences you to choose another option. Humans often struggle with complex trade-offs, especially in high-pressure situations, which is when the Decoy Effect comes into play.
This concept is common in today’s world, whether you’re booking through a travel agency or directly with an airline. You will typically encounter three or four fare options, with one often priced slightly higher but perceived as offering better value.
For instance, when considering American Airlines, you might see three fare options:
- Main: $559 (no checked bags, no extra legroom)
- Main Plus: $683 (includes one checked bag and extra legroom)
- Business: $1,036 (includes two checked bags and more amenities)
With less than a $100 price difference, it is likely that many people will choose the middle option, as it appears to offer the best value. However, upon closer inspection, the only significant benefit of the Main Plus option is the inclusion of one free checked bag, as seats with extra legroom are still subject to availability. By presenting the prices in this way, the middle option can appear more appealing, especially if you overlook the details.
Trick #3: Scarcity Bias
“Only 1 seat left at this price!”
Websites like Booking.com, Expedia, and Amazon have long used messages such as “1 room left” or “last item in stock” to create a sense of urgency and encourage you to make a purchase. This tactic is known as Scarcity Bias, a psychological principle that evokes a fear of missing out (FOMO). It makes you feel like if you don’t act quickly, you will lose the opportunity that others are seizing.
Nowadays, you’ll notice warnings about “limited seats,” “X seats left,” or “high demand” alerts not just in e-commerce, but also with airlines like British Airways and Delta. These messages create a sense of urgency and trigger FOMO (Fear of Missing Out), encouraging you to book a ticket quickly.
In fact, a survey conducted by Expedia revealed that 67% of travelers have booked a trip because of FOMO. This highlights the potential profit companies can gain simply by adding a line of text to their offers.
However, when you see “1 seat left,” it usually refers to that specific fare. So, the next time you encounter this message, be sure to check other websites to verify the availability.
Trick #4: Anchoring Bias
“Was $899. Now only $599!”
A few years ago, I visited several car dealerships to buy a used car. I noticed a common pattern among all the dealers: they would always show me a slightly higher-priced car first before presenting the more affordable options.
This practice is based on a psychological principle known as Anchoring Bias. Anchoring bias refers to the tendency for people to rely too heavily on the first piece of information they receive. Regardless of its accuracy, this initial information often serves as a reference point for making subsequent judgments. In my case, the dealer ensured that I saw the expensive cars first, which made the cheaper options seem like better deals. The dealer effectively set an anchor to shape my perception of value.
Similar techniques are widely used in airline ticketing, where customers are first shown a higher price and then presented with a cheaper option, creating the impression of a savings, even though the original price may have been inflated.
For example, with Spirit, they might cross out the original price of $123.71 and display a new price of $117.23. If you’re not paying close attention to the numbers or doing the math, you might feel as though you’re saving a significant amount. However, when you calculate it, the difference is only $6, which isn’t a substantial discount.
Having multiple tabs open to compare prices can make it easier for these techniques to influence your decision. This nudging encourages you to stay on the website longer, increasing the likelihood of completing the purchase—exactly what Spirit aims for.
Trick #5: Drip Pricing (a.k.a. Partitioned Pricing)
$19.99 flight? Cool. Add seat: $12, bag: $20, payment fee: $5…
United initially offered me a ticket for $15 USD, but then, after seats, luggage, and everything, I ended up paying more than $100 USD.
This is called Drip pricing.
Drip pricing is a psychological strategy that many airline companies use to present a lower initial fare and then reveal additional fees later in the booking process. The goal is to encourage you to commit to the booking, making you emotionally and time-invested. This can trigger the sunk cost fallacy, leading you to think, “I’ve already chosen this flight, I might as well add baggage.”
AirAsia is a notable example of utilizing drip pricing to increase costs. For instance, I encountered a fare of $95 for a one-way flight from Singapore to Kuala Lumpur. Soon after, I was prompted for additional services: seat selection ($15.18), fast track ($23.17), luggage, insurance, and more.
This strategy also helps these airlines rank higher on comparison sites like Google Flights, Expedia, and Kayak. While the initial fare may seem much lower, the additional fees can ultimately exceed the base ticket price.
Trick #6: Endowment Effect
“You’ve picked Seat 14A — Confirm for $16 to keep it.”
When you sign up for an Instagram account, the first thing you’re asked to do is choose a unique username. This is a clever strategy to engage you in the process. According to the Endowment Effect, people tend to value things more highly once they feel a sense of ownership over them.
Ryanair is well aware of this principle and is using it to “pre-select” a recommended seat during the booking process. This makes it seem as if the seat is already yours; you just need to click one button to secure it. Even if you hadn’t intended to select a seat originally, the thought of canceling it feels like a greater loss, which makes you more likely to pay to avoid that feeling—a concept known as loss aversion.
Even if you hadn’t planned to select a seat, cancelling it feels like a bigger loss and you’ll be more likely to pay to avoid that feeling (Loss aversion again).
Trick #7: Default Bias
“Travel insurance included, untick to remove.”
Humans often prefer sticking to familiar options, especially when those choices seem to offer protection. This behavior is known as the Default Bias principle.
This is called the Default Bias principle.
Very often in both flight booking or car rentals, you will see options such as travel insurance, carbon offset donations, or SMS alerts preselected for you, as there’s a higher chance you’ll stick with the option and continue with the checkout process.
I came across a travel website where the insurance option was pre-selected during the checkout process. I noticed this late at night while looking for a flight, and I almost missed it. What’s even more concerning is that the accompanying text adds pressure by emphasizing the risks of opting out.
“I understand that by declining coverage I may otherwise be responsible for certain cancellation fees and delay expenses.”
This makes opting out feel like I am taking significant risks, which increases the likelihood of me staying with the default option. However, I ultimately decided to opt out.
Airline companies strategically use psychological principles to maximize profits.
