For actual two phase pipe systems, variations in input flows often occur naturally, or may be imposed intentionally. Changes in holdup (in-situ fluid fraction) caused by such input variation will propagate along the pipe, and may affect overall performance. The current paper describes experimental investigation of holdup propagation in oil-water flow in a vertical pipe. It is shown that larger changes in input holdup profile may either compress or rarefy as they propagate along the pipe. For the cases considered, observed behaviour could be quite accurately predicted using a non-linear, hyperbolic wave propagation relation and a drift flux model, calibrated at steady-state flow conditions. The methodology outlined enables prediction and optimization of processes where the fluid content in a pipeline, or wellbore, is displaced by another, immiscible fluid.