What will your vacation truly cost? The rise of dynamic pricing is taking over rapidly.

Earlier this year, JetBlue ignited controversy by introducing dynamic pricing for baggage fees. A first checked bag now costs $45 during "off-peak" flights and $50 during "peak" times. The fee for a second checked bag can soar to $70, with prices escalating further if booked within 24 hours of departure. Additionally, JetBlue has already increased checked bag fees multiple times this year.

Dynamic pricing, also known as surge pricing, appears to be sweeping through the travel industry, affecting everything from dining to ride-sharing services. While mileage reward redemptions have long followed this model, now off-peak and peak pricing is infiltrating more aspects of travel, with JetBlue leading the charge.

"Dynamic pricing embodies a core economic principle—supply and demand," explained Henry Harteveldt, president of the Atmosphere Research Group, a travel market research firm. "An airline has a limited amount of product, prompting them to adjust prices accordingly."

Harteveldt anticipates that dynamic pricing will pose an increasing challenge for travelers ahead. "The issue with dynamic pricing is the unpredictability of costs," he noted. "One day it might be $30, another day $45, and at times even $15. The unfortunate reality is that consumer needs are secondary in these decisions made by airlines."

Here’s a look at where dynamic pricing is currently at play and where it may emerge next.

Ride-hailing services

The business models of ride-hailing apps are fundamentally built on dynamic pricing. Increased demand leads to higher fares, with the expectation that elevated prices will motivate more drivers to come online. You’re likely to encounter surge pricing during severe weather conditions or at popular events (like concerts), when driving in certain areas becomes challenging or congested.

In my view, companies like Uber, Lyft, and even Revel have improved their strategies to maximize fares without alienating customers. Whenever I arrive at New York-area airports, I typically compare all three apps to find the best deal. More often than not, their prices are only a few dollars apart.

Currently, non-ride-hailing companies are eager to replicate and profit from this pricing model.

Frequent flyer tickets on various airlines

You may have observed that numerous airlines have fully embraced dynamic pricing for award tickets, with these rates increasingly mirroring cash fares. This trend is particularly evident with Delta Air Lines, where achieving over a penny per mile in value from award redemptions is quite uncommon.

Delta SkyMiles was the pioneer among major programs to eliminate award charts back in 2015. For instance, a one-way business class flight from New York's John F. Kennedy International Airport (JFK) to London Heathrow (LHR) in August will cost you between 200,000 and 280,000 miles when booked with SkyMiles. The cash fare for this ticket is $2,283, meaning that even in the best-case scenario, you’re barely getting over a cent per mile when using miles for this flight.

Naturally, American Airlines and United Airlines have also abandoned award charts. I fondly recall being able to book American Airlines flights to Europe for just 50,000 AAdvantage miles one-way in business class. In the past, most airline loyalty programs utilized a zone- or distance-based award chart, which allowed members to check how many points or miles were needed to fly to any destination in any class. Those times are now behind us.

Although such great deals are rare these days, you can still occasionally uncover solid mileage offers with American AAdvantage and United MileagePlus. However, this is rarely the case with Delta. For U.S. airlines, the golden era is largely a thing of the past.

Dining establishments

Wendy's encountered significant backlash when it announced plans to introduce dynamically priced menu items in 2025. Reports indicated that during peak hours, when the restaurants were busiest, items like burgers and fries would be priced higher than normal. However, Wendy's claims this was a misunderstanding.

"Some media outlets misinterpreted this as our intention to increase prices during high-demand periods at our restaurants. We have no intention of doing that and would never raise prices when our customers are at our locations," the company stated in a release. Instead, Wendy's mentioned it would actually reduce prices during quieter times.

Nonetheless, dynamic pricing is already being implemented at other dining establishments.

As reported by the Wall Street Journal, Dave & Buster's is one of many restaurants charging more for food during busier times. Additionally, there's a company named Juicer that assists restaurants in adopting surge pricing.

Typically, restaurants charge higher prices for dinner compared to lunch, but adjusting prices based on demand is a recent trend. Next time you eat out, take a closer look at the menu.

JetBlue luggage fees

In April, JetBlue revealed it would implement surge pricing for baggage. The fee for the first checked bag now varies between $35 and $50, depending on whether it's considered a "peak" or "off-peak" travel period. Fifty dollars is the highest charge in the industry for a first checked bag on domestic flights.

You can save $10 off that price if you add a bag at least 24 hours before check-in.

What does JetBlue define as "peak" travel times? The airline identifies the entire summer season and several holidays, including Valentine's Day, Presidents Day, and much of April, as peak periods.

Here’s the peak season pricing schedule for 2024 and 2025 from JetBlue:

• June 20-Sept. 3, 2024
• Nov. 21-Dec. 2, 2024
• Dec. 19, 2024-Jan. 6, 2025
• Feb. 13-Feb. 24, 2025
• March 3-March 28, 2025
• June 19-Sept. 2, 2025
• All other travel dates fall under off-peak pricing

JetBlue explains that it's increasing fees due to a significant rise in the cost of transporting luggage and the company's ongoing struggle to become profitable since COVID. A spokesperson stated, "Although we dislike raising fees, these adjustments are necessary to restore profitability and cover the higher costs," in a statement to CBS News in April.

As of now, other airlines have not followed JetBlue's example of implementing surge pricing for baggage, but it's likely that JetBlue won’t be the only one making this move for long.

For instance, Frontier Airlines imposes fees ranging from $50 to $89 for carry-on bags, depending on the timing of your purchase. Similarly, other airlines also implement fluctuating prices for checked baggage based on when you buy.

"Everything will be dynamically priced according to supply and demand," he explains. "Airlines are becoming more sophisticated with the technology they employ. We will soon see airlines offering bundled deals that might include services the consumer has already shown interest in, such as reserved seating, checked bags, carry-on luggage, extra-legroom seats, and priority boarding. This trend is on the rise."