Business

Unraveling mystery of airline ticket pricing

We've always wondered if the guy or gal in the next seat got a better deal.

Now, with higher airfares on the horizon, finding the cheapest ticket for an upcoming flight has become even more important.

For many travelers, airline ticket pricing remains a mystery. Who hasn't looked up a flight, checked it again a few days later and seen the price change significantly, even with the travel date several weeks away?

For insight on how and why fares for the same flight vary, the Observer asked US Airways to track price changes for four domestic flights to four different markets.

In addition, an informal survey of travel industry experts last week sheds light on how far in advance you should buy ticket – including the existence of a “sweet spot” where travelers typically can find the best price. As the US Airways tracking showed, buying as early as possible may not net you the lowest fare.

US Airways tracked fare changes for round-trip flights that left Charlotte May 14 and returned May 21 from four cities: Chicago, Indianapolis, Orlando and Tampa. Tracking of the coach-class fares began two months before the outbound flights and ended the day of those flights.

As you might guess, fares were most expensive in the few days right before the flights. But instead of steadily rising over two months, a couple of fares actually dropped a few weeks before the travel dates before shooting back up.

Also, fares for routes where US Airways competes for nonstop service were cheaper than routes where it has the only direct flights. But even on a route where US Airways has the only direct service, the fare dropped close to the flight after another airline with connecting flights slashed prices.

For instance, US Airways has the only direct flights from Charlotte to Tampa. The airline raised its round-trip fare from $240 to $338.60 about a month before the May 14 flight, then dropped it back to $240 two weeks later and sold tickets at that price for almost two weeks.

Tom Trenga, US Airways' vice president for revenue management, said another carrier had a fare sale for Charlotte-Tampa service with one connection.

People generally will pay more for a direct flight, he said, but some could choose a connecting flight if it's significantly lower. To keep those customers, Trenga said, US Airways had to adjust prices.

“Direct competition matters,” he said, “but indirect competition also matters.”

Business premium

Leisure travelers especially can be fickle, choosing a connecting flight even if it's only slightly less expensive than direct service. While $20 may not seem like much, it adds up for a family of five, Trenga said.

“For that group of people, 20 bucks is a big difference,” he said.

Business travelers are different, and the fares for flights to Chicago and Indianapolis show how a lack of direct competition can result in sky-high ticket prices.

Fares to Chicago were lower because US Airways competes with United and American. As the flight dates approached, the Indianapolis trip became much more expensive, mainly because US Airways knew last-minute travelers wouldn't have another choice for nonstop service.

That's why a ticket that sold for less than $300 for more than a month jumped above $500 and then to almost $870 as the trip approached.

“For business-type passengers, you should be able to extract more of a premium,” Trenga said. “The schedule is very important, and they're willing to pay more for that.”

‘The sweet spot'

For these four flights – a microscopic sample of the tens of thousands that US Airways had during this period – fares generally were lowest about six to eight weeks before the outbound flight. Three flights saw significant drops from March 17 to April 3, and the fourth was the same both days.

Is this the “sweet spot,” the best time to buy a ticket?

Executives at travel companies and other industry experts agree that fares generally increase three weeks before a flight, and the odds of finding a good deal after that are slim.

For instance, tickets booked on Expedia this spring that were 14-30 days in advance of a trip were on average 8 percent cheaper than those booked 7-13 days in advance and 23 percent cheaper than those booked less than seven days in advance.

So you definitely don't want to wait until the last minute. But with airlines cutting flights, most executives and experts say you also may not want to wait until two months before a trip to start looking.

The window of six to eight weeks before a flight will be tested by flight cuts, many say. Carriers will control fewer seats than before, and unless demand drops, that means fares will start climbing earlier.

“Sale” fares also will be higher than before because they'll be based on higher regular fares. So far this year, airlines have tried to raise fares 19 times and been successful 13 times.

Buy now?

As a result, if you see a fare that works for you three or even four months before a trip, it could make sense to pull the trigger because fares likely will continue climbing.

“Prices are going to go up,” said Rick Seaney, chief executive of FareCompare. “The best time to buy right now is right now.”

One thing that could help offset higher prices is buying on the right day. That's Tuesday, some experts say, because it's after airlines have rolled back weekend fare hikes and before they've raised fares again later in the week. Stay away from Friday.

If all this seems more confusing than it needs to be, remember that airlines – even before the current surge in fuel costs – have always been a business. As such, they will always try to get as much money as possible from every seat on a plane.

While each coach-class seats may be the same size and be on the same plane, Trenga said, “it's not the same thing if you bought at different times.”

We've always wondered if the guy or gal in the next seat got a better deal.

Now, with higher airfares on the horizon, finding the cheapest ticket for an upcoming flight has become even more important.

For many travelers, airline ticket pricing remains a mystery. Who hasn't looked up a flight, checked it again a few days later and seen the price change significantly, even with the travel date several weeks away?

For insight on how and why fares for the same flight vary, the Observer asked US Airways to track price changes for four domestic flights to four different markets.

In addition, an informal survey of travel industry experts last week sheds light on how far in advance you should buy ticket – including the existence of a “sweet spot” where travelers typically can find the best price. As the US Airways tracking showed, buying as early as possible may not net you the lowest fare.

US Airways tracked fare changes for round-trip flights that left Charlotte May 14 and returned May 21 from four cities: Chicago, Indianapolis, Orlando and Tampa. Tracking of the coach-class fares began two months before the outbound flights and ended the day of those flights.

As you might guess, fares were most expensive in the few days right before the flights. But instead of steadily rising over two months, a couple of fares actually dropped a few weeks before the travel dates before shooting back up.

Also, fares for routes where US Airways competes for nonstop service were cheaper than routes where it has the only direct flights. But even on a route where US Airways has the only direct service, the fare dropped close to the flight after another airline with connecting flights slashed prices.

For instance, US Airways has the only direct flights from Charlotte to Tampa. The airline raised its round-trip fare from $240 to $338.60 about a month before the May 14 flight, then dropped it back to $240 two weeks later and sold tickets at that price for almost two weeks.

Tom Trenga, US Airways' vice president for revenue management, said another carrier had a fare sale for Charlotte-Tampa service with one connection.

People generally will pay more for a direct flight, he said, but some could choose a connecting flight if it's significantly lower. To keep those customers, Trenga said, US Airways had to adjust prices.

“Direct competition matters,” he said, “but indirect competition also matters.”

Business premium

Leisure travelers especially can be fickle, choosing a connecting flight even if it's only slightly less expensive than direct service. While $20 may not seem like much, it adds up for a family of five, Trenga said.

“For that group of people, 20 bucks is a big difference,” he said.

Business travelers are different, and the fares for flights to Chicago and Indianapolis show how a lack of direct competition can result in sky-high ticket prices.

Fares to Chicago were lower because US Airways competes with United and American. As the flight dates approached, the Indianapolis trip became much more expensive, mainly because US Airways knew last-minute travelers wouldn't have another choice for nonstop service.

That's why a ticket that sold for less than $300 for more than a month jumped above $500 and then to almost $870 as the trip approached.

“For business-type passengers, you should be able to extract more of a premium,” Trenga said. “The schedule is very important, and they're willing to pay more for that.”

‘The sweet spot'

For these four flights – a microscopic sample of the tens of thousands that US Airways had during this period – fares generally were lowest about six to eight weeks before the outbound flight. Three flights saw significant drops from March 17 to April 3, and the fourth was the same both days.

Is this the “sweet spot,” the best time to buy a ticket?

Executives at travel companies and other industry experts agree that fares generally increase three weeks before a flight, and the odds of finding a good deal after that are slim.

For instance, tickets booked on Expedia this spring that were 14-30 days in advance of a trip were on average 8 percent cheaper than those booked 7-13 days in advance and 23 percent cheaper than those booked less than seven days in advance.

So you definitely don't want to wait until the last minute. But with airlines cutting flights, most executives and experts say you also may not want to wait until two months before a trip to start looking.

The window of six to eight weeks before a flight will be tested by flight cuts, many say. Carriers will control fewer seats than before, and unless demand drops, that means fares will start climbing earlier.

“Sale” fares also will be higher than before because they'll be based on higher regular fares. So far this year, airlines have tried to raise fares 19 times and been successful 13 times.

Buy now?

As a result, if you see a fare that works for you three or even four months before a trip, it could make sense to pull the trigger because fares likely will continue climbing.

“Prices are going to go up,” said Rick Seaney, chief executive of FareCompare. “The best time to buy right now is right now.”

One thing that could help offset higher prices is buying on the right day. That's Tuesday, some experts say, because it's after airlines have rolled back weekend fare hikes and before they've raised fares again later in the week. Stay away from Friday.

If all this seems more confusing than it needs to be, remember that airlines – even before the current surge in fuel costs – have always been a business. As such, they will always try to get as much money as possible from every seat on a plane.

While each coach-class seats may be the same size and be on the same plane, Trenga said, “it's not the same thing if you bought at different times.”

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