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How Airfare Pricing Works

Constant fluctuancy of airline ticket prices can be rather frustrating.  Hands up if you’ve ever seen an excellent airfare rate advertised, but as soon as you enquired about it, the price had gone up by hundreds – if not thousands of Rands.

This is deceiving and upsetting – right?

 

Airfares seem to change constantly every week, day or even every hour by Airlines and you are told “without prior notification” by the Airlines. However, there is a strategy behind it and it is called airline revenue management: the decisions are made by an algorithm that adjusts fares by using information such as past bookings, remaining capacity, demand for specific routes and the likelihood of selling more seats later. This rather complex strategy or system is also influenced by base fares, booking classes, taxes and airport fees, fuel surcharges, food, seat selection and baggage. Basically, airlines are trying harder these days to maximise profit while also appearing to offer the best deal to the market. Here’s how they go about it:

 

Business or leisure?

Airlines know that there are mainly two types of travellers: leisure travellers and business travellers. They both need flights but their buying behaviour is quite different.

 

While the leisure traveller is (generally) more flexible with dates, business travellers have to travel on a certain day and often at a certain time. Leisure travellers tend to book months in advance giving them time to plan their trip, therefore they buy up the cheaper booking classes.  Business travellers have to leave quite spontaneously sometimes and become desperate and are willing to pay more for a ticket in order to make it to their meeting. As we get closer to the departure date, there are only seats in the higher, more expensive booking classes available.

 

While you might expect the airlines to lower their prices a few days before the day to ensure full occupancy of flights, the opposite actually happens : Selling 20% of the remaining seats for R15000 is more profitable than selling half of them for the regular fare of R8000.  Airlines sometimes overbook flights to gain maximum occupancy of flights thereby guaranteeing them maximum revenue for flights.

 

So, why do prices change?

Prices change according to supply and demand. There are some dates of the year when the demand is higher, such as over Easter, Christmas, school holidays and during sporting and entertainment events. During these periods, airlines will raise their prices to increase revenue.

 

Airline competition is another important factor to consider. If a few airlines are flying a specific route, region or destination, competition becomes higher so airlines will compete with each other by lowering their airfares or offering a free night stay if stopping over in their hub city before arriving at your final destination.  However, if there’s a lot of airline competition, there’s also a lot of passenger competition too to book the cheaper tickets.

 

Are there cheaper days to fly and book?

Yes, indeed. Generally, leaving on a Monday, Friday or Sunday will increase the risk of paying more for your air ticket as business travellers leave or return from their trip and families leave or return from their weekend trips.  Finding a cheap ticket is more likely on a Tuesday, Wednesday or Saturday. In addition, if you're flexible with departure and/or arrival times, the better your chances of paying less, since most people prefer to leave at 9am, instead of 5am, or return before 8pm, not 11pm.

 

Many of the cheaper booking classes also have a 14-day advance purchase restriction, meaning that you can only buy them 14 days or more before your actual departure date.  Other cheaper fare classes also have a Saturday night rule, where you have to stay the Saturday night in your destination for the lower fare. These usually rule out the business traveller as they want to get home for the weekend or they fly last-minute.

 

Understanding these basics will hopefully increase your chances of paying less for your flights in the future. 

The only way to secure your airfare price is to book and pay for it once quoted immediately.

For sure, we can help with that - Get in touch with Clic Travel today.