Simon Calder: Flights of fancy and the million pound upgrade

The man who pays his way

The long way round: Can the M25 compare to Route 66? (AFP/Getty Images)

You go online to book a flight: the air fare quoted depends on where you live, and your previous buying behaviour. That was the surprising claim made last week on Radio 4's Today programme.

The excellent writer and psychologist, Oliver James (author of The Selfish Capitalist: origins of Affluenza) asserted "If you're trying to get a flight to get away for Christmas, there is no such thing as 'a price' for an air ticket." He cited a study showing, he said: "That the retailers of air tickets will actually vary the price according to your postcode and shopping history."

Having studied the reservations systems of airlines, and travel agents (yes, I should get out more), I was intrigued. Airlines tweak air fares constantly, cutting them to boost demand or putting prices up when sales are strong. Back-office boffins analyse future bookings and past behaviour in order to maximise earnings while filling all the seats. But the only historic data they use is the anonymous aggregation of buying patterns.

Here's how the systems work: "By last New Year's Eve, the 9 January flight to Tenerife was four-fifths sold, and we filled the remaining seats at an average of £120 each. For the corresponding flight this year, we're only 70 per cent sold. Let's cut the price to £100 and see if a few more bookings come in. If they do, we can put the price back up. If they don't, we'll have to try £80."

Making these calculations across thousands of flights, and adding factors from competitors' behaviour to European football championship fixtures, tests the brainiest computers, without the extra complexities of customers' addresses and travelling history.

So, while some airlines might be eager to test the concept, to the best of my knowledge, none does. Until Mr James is able to enlighten me about the study he mentioned, I must assign his theory to the same category of doubt as the mistaken belief that airlines pay attention to how often you check a particular flight. If you've searched repeatedly for, say, Gatwick-Tenerife on 9 January, travel conspiracists insist you will pay more than someone on their first attempt.

"Dynamic packaging", where you choose a flight and accommodation and they are priced together online, is a good way to book a holiday: you get a combination of low prices and the gold-plated consumer protection that comes with a package. You can also contemplate add-ons such as a better class of room – just as reader Janet Leicester did when booking a package to St Lucia with BA Holidays:

"Imagine my astonishment when the room upgrade for the Coconut Bay is coming in at £1,093,041.00. A spokeswoman for BA Holidays apologised and said, "We can confirm that the error in the price has now been rectified."

A more enticing upgrade opportunity has been quietly introduced by Virgin Atlantic – and you won't read about it on the internet (except here). James "Lloydie" Lloyd, the broadcaster and comedian, reports that Sir Richard Branson's airline has started auctioning upgrades to premium economy: "I'm flying to New York next month. Out of the blue I was sent an invitation to bid between £10 and £600 to upgrade."

Mr Lloyd duly bid £60 for the outbound day flight, £120 for the homebound overnight trip. If you rashly bid too high, and regret it, this is the one aspect of online dealings with airlines that is cost-free: you can cancel or amend your offer up to 68 hours before departure. In fact, Mr Lloyd was sent a separate offer for a confirmed upgrade on the inbound flight for just £95, so he cancelled that bid. He will find out at check-in if his outbound bid has worked – and, if it has, just how irritated those passengers who paid full price for posh seats will be.

There's no place like the Home Counties

Today we celebrate the world of travel possibilities that opens up with the New Year. But is there any need to venture beyond the M25? Just before Christmas, we reported on the tour wars between rival coach firms seeking to launch trips around London's Orbital Motorway. Brighton & Hove Buses has leap-frogged its rival, Premium Tours, by bringing its first M25 tour forward to 22 March.

Some views on our website pour scorn on the claim that the M25 can become the British Route 66. One said: "The M25 tour buses must be open-top. Tourists can then take in the true ambience of the constant 24-hour noise, the addictive smell of petrol, diesel, oil and rubber all mixed into one." Another added: "The only comparison with Route 66 is that it will probably take as long to complete a circuit of the M25 starting and ending at Clacket Lane Services as it does to drive from Chicago to California."