Perhaps, when you consider the mystery behind the fascinating nature of flight prices, particularly as a science student in high school; the closest memory that comes to mind is the experiment of the swinging pendulum in the physics laboratory class. In fact, when it was originally said that change is the only constant thing in the world, was it flight prices the author had in mind?
Flight prices change all the time like prices on the stock market – up one moment, and down the next, with almost no predictable pattern.
Prices of commercial aircraft flights fluctuate basically because tickets are sold, bought, changed, or canceled. At any time of the day, the price can change when certain decisions regarding the release of tickets into the market are made by the airline’s revenue planning computers.
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Fluctuations in Flight Prices
Flight prices are set and regulated by the pricing team of airline companies. They harness revenue planning computer programs to generate all the seat prices and analyze booking patterns months ahead of the flight date.
For example, the computer programs for Dana Airlines might decide that there will be 20 seats at $149, 10 seats at $259, and so on. This data is fed into the reservation systems, which displays the constantly fluctuating available prices. The computer system will show the next price level when the $149 seats are sold out.
As the flight date draws closer, the revenue planning computer reviews the prices of the remaining unsold seats and changes in real-time the number of available seats at each price tier as they get booked in real-time. The seat prices are reduced if sales are slow and increased if the flight is close to capacity.
There are fluctuations in flight prices because fare categories are constantly becoming sold out or getting reopened as other travelers cancel seats. Flight prices also change as a result of regular inventory updates from the airlines.
The Airline’s Predicament
Take for instance, on a plane with a capacity of 120 passengers flying from one point to another. There will be different groups of people on this flight. There will be the “go-at-any-price” group, who don’t care about the flight price. Then there will be the larger “price-conscious” group who will only buy the flight ticket if it is affordable. These distinct groups of people pose a price dilemma.
The airline knows if they set the maximum price they can get from the first group, they would generate a lot of revenue but they would also travel with a lot of vacant seats (which makes no business sense). The other option of charging a price low enough to attract the second group means they would also be under-charging the “go-at-any-price” group.
To be able to maximally generate revenue from both groups at every flight, airliners came up with the “same seat, different prices” strategy called yield management.
Yield management is a fluctuating pricing strategy aimed at controlling flight prices. There are three unique elements of yield management. They are pricing strategy, availability control, and control of inventory.
- Pricing strategy: Pricing strategy entails the maximization of profits based on customer demands.
- Availability control: This is the section of yield management that deals with controlling the available airline passenger seats. It uses the knowledge of each target group and their preferences to determine when and how to price these tickets correspondingly.
- Control of inventory: This is the accurate utilization and control of available logistical components required for efficient flight business.
How to Maximize the Fluctuations in Flight Prices
Having mentioned the basic reasons behind flight price fluctuations, it is important to note that there are brief glitches in the system from time to time. There will be periods when prices dip temporarily before regularising when new bookings are entered. The fluctuations in flight prices can be exploited in the following ways:
Plan Early and Check Regularly
To be able to save optimally, flight prices for any potential trip must be checked early and also checked often! Get familiar with the market to learn what a good and bad deal is. Buy off a good deal immediately because often as it is in reality, good deals are temporary.
Always remember, at any given time, there are myriads of leisure travelers looking for affordable flights and booking reservations – and each reservation has consequences on the prices paid by subsequent travelers on the same flight.
Fly Preferably on Weekdays
Flight pricing follows a weekly cycle despite the fact that the prices fluctuate constantly. Many airlines offer discounted seat prices up to 15% to 25% on Monday night. While on Thursday night, these companies usually mark up their basic prices across-board by a few dollars, to see if the higher rates are sustained over the weekend. Prices can then be normalized on Monday morning if rival companies resist the bait.
Furthermore, on weekdays, airlines passively manage their inventory as compared to weekends. So if seats sell at a cheap price on some flights on weekdays, prices automatically shoot up by the weekend. However, price analysts may decide later to offer more seats at cheaper prices, but that decision would wait till they resume work on Monday.
Buy Now, Look Later
It is usually said to “look before leaping”, but the opposite is true in flight pricing. A booking can always be canceled without penalty within 24 hours. This time frame is enough to re-evaluate the purchase if need be and act appropriately. As earlier stated, book immediately you see a good purchase because delay may be denial.
Timing Is Everything
From studies, the best time to buy a domestic flight would be about 50 days in advance. It is difficult to get the ideal lowest price ticket because these lowest possible prices change averagely once every 4 days. However, when going on holiday, traveling during summer, and traveling with a family or group, a much earlier date should be considered. In general, be flexible and this includes not booking too early either.
Airlines have a long history of putting out high prices when flight sales kick off. For example, prices tend to be lower four months before the travel date compared to ten months before travel.
And on average, domestic flights open about $50 higher than their ultimate lowest price and they usually stay that way for some months more. The best price for a domestic flight is usually offered at a period between one and four months ahead of the scheduled flight date, called the “prime booking window”.
However, it is advised to buy earlier than the “prime booking window” earlier suggested, for very popular and busy routes during very special seasons, holidays, or festivals when flights tend to be filled to capacity quickly. Also, be on the lookout for seasonal and flash seat sales.
Vendors’ Tricks
Sometimes in a bid to make sales profit, flight vendors go to any length to exploit naive customers. Below are some tricks they use in taking advantage of unsuspecting customers.
Cheap Flight Trick
For instance, a United Airlines flight to Chicago costs from $120 to $1785. Any random passenger would naturally take the cheaper option. But the goal of the airline vendor is to make profit by channeling every potential traveler into the highest possible “price bucket”, certain restrictions are added to the lowest fares that automatically limit the number of people that can take advantage of the available cheaper options.
In other words, the $120 price may require you to complete a 21-day advance purchase and fly on less popular days like Tuesday, Wednesday, Saturday when it is harder to sell seats at higher fares. Generally, the lower the price, the more restrictions placed on it. Also, as the plane fills up, more and more price levels will be “closed out” so that potential passengers will be stuck with higher prices.
Seat Blocking
The dwindling supply of seats at low prices influences customers to hurry up and book. There is evidence that travel vendors take advantage of this rush by manipulating a hesitant customer to book a flight through an act popularly known as “seat blocking”.
The airline vendor probes into the airline’s booking system to temporarily reserve seats in the cheapest price category, inadvertently pushing up the price of the remaining seats. The customer, seeing this increased price, is then pressured into quickly booking a flight scared that the price will continue to soar.
Reference Pricing
Airlines exploit the innate human desire for simplicity by confusing prices on low-cost flights. Airline companies do this by separating various fees in order to push an appealing lower base cost to unsuspecting customers. They know people often unconsciously assess the prices of flights by comparing fares to another equivalent flight in that situation.
The average customer then goes for the seemingly cheaper flights not paying attention to the extra add-ons. Though many customers later learn about this ploy, airlines still change their tricks in the future. Sadly for the consumer, he’s in a continuous race with the company’s evolving schemings.
The Cookies Myth
The idea that airline travel websites keep hiking prices when customers continue checking without deleting their cookies has been largely regarded as an urban myth. Airlines on their part, have continued to strongly deny this illegal accusation. However, if a flight price is checked continuously, the system may react by “blocking” the cheaper tickets as it has been triggered to expect a purchase.
For example, if there are only 7 tickets available but 25 browsers or reloads keep checking the same ticket, the site will react by blocking that price to avoid disappointing 18 more customers who want to make the same purchase.
Conclusion
Before now, due to programming limitations, airfares could only be changed three times a day. But now, improved technology has enabled airlines to fluctuate prices more than ever. Airlines now have quick and unprecedented access to more real-time information on passengers. They can now analyze and modify their booking systems with advanced computer algorithms, to continuously adjust prices based on shifts in customers’ demands and available aircraft seats.
Therefore, passengers should also take advantage of these continuous price fluctuations by practicing all the aforementioned techniques to secure flight prices within their budget.
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