The Truth on Airline Prices

Airline tickets are a source of many urban legends and myths. These include discounts offer by airlines, the best day of the week to buy a ticket, and the theory suggesting many carriers use cookies to increase the airfares for their passengers. The reality is these statements are not entirely true. Although there are studies that suggest prices can be lower or higher on a given day of the week, yet there is no clear consensus on which day it is.

The Truth About Airline Prices

However, what is true about the airline pricing industry is carriers use sophisticated and complex pricing systems. When the flight is full, the per passenger cost of the airline is the lowest. This is an incentive for the carriers to sell as many seats as possible. The airlines race against time because they do not want to discount their products more than they have to. Hence they face two contradictory goals: to sell as many full fare seats as possible and to fly full planes to maximize revenue. This process in the industry is known as revenue or yield management.

Allow Yield Management Works

For each route or flight, the airline has different price levels from the cheapest price to the most expensive fare. Prices in the industry are referred to “buckets”. So you can interpret the seats as balls that are allocated among the buckets. Historical data showing how well a certain flight sells will determine the initial allocation of seats between the price buckets. For instance, there will be fewer seats on offer on a Thanksgiving week than the same day during the third week in February. Yield manager adjust and monitor the seat allocation as the seats on a flight sell. Check here.

Where to Buy a Ticket

The first question on most travelers mind is when the best time to buy the tickets for the next trip is. However, another equally important question is where to buy this airline ticket. Airlines not only distribute their inventory on their websites but also on several distribution systems. This means depending on where you look, pricing can sometimes differ. This may likely be because of differences in the contracts between the distribution systems and the airlines.

When to Book?

About 2 months before the departure date, the airlines’ yield managers start to look at flight bookings. This means it is not a good idea to book 2 months in advance. Studies have shown that airlines initially leave the cheapest price buckets empty, and it is only a couple of months before the departure date when yield managers start moving some seats into those buckets. So it is advisable to book between 2 months and 3 weeks before the flight date because the fare quotes remain mostly flat during this period. The price quotes start increasing 2 to 3 weeks before the flight date because this is when business travelers start booking. Although a price drop is still possible during this period, the possibility of a price increase is much higher. This is also the time when you will find significant differences between the price quotes depending on the contract they have with airlines and where you look.

So if you want to travel during the peak period, it is smart to buy your airline ticket early. Otherwise, you might have to monitor the offered prices for some time before buying. Check out this site: