Up and Down: Ins and Outs of Airline Pricing

Lifestyle

Up and Down: Ins and Outs of Airline Pricing

The next time travel planning takes you skyward, remember these common reasons why the price of a single flight may change from one day to the next.

March 23, 2016

Planning a vacation or trip can be an expensive investment of your time and money, especially if air travel is involved. Many travelers comparison shop for the best deals on airfare, but often discover the same seat on a single flight can change prices, sometimes multiple times, in a short amount of time. While there are many opinions and theories about the best time to purchase the cheapest airfare, here are the most common factors that cause the price of any particular flight to fluctuate.

  • Demand – Pricing is primarily based on demand and travelers should expect to pay more during peak travel times like Thanksgiving and Christmas or for special events like the Super Bowl or Mardi Gras. Your destination is also part of this equation; think anywhere in Florida during spring break.
  • Revenue management – While many airlines allow travelers to book flights up to a year in advance, they don’t actively analyze the supply and demand specifics until roughly four months out, often changing prices as a result of the analysis. This process of attempting to match demand, travelers, time and price in an effort to maximize sales is called revenue management and is a common practice among airlines, hotels and car companies, among others.
  • Route specifics – Another offshoot of demand, airlines will change the size or type of the aircraft or change departure times if a route can be more profitable, resulting in pricing changes.
  • Reacting to a competitor – If a competing airline offers a sale or enters a competitive market, other airlines are likely to react and match the competitor’s price.

Despite its volatility, one cost that’s not behind frequent near-term fluctuations in ticket price is fuel. Airlines are disciplined about controlling capacity and don’t add flights solely because of cheaper fuel. Additional flights come with more infrastructure-related and staffing costs making added capacity hard to remove when fuel prices inevitably increase.

Travelers should be aware of an airline’s rebooking or cancellation policy before purchasing a ticket, just in case a better deal is yet to come, and then likely go.



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