Have you ever compared the fare you paid for an airline ticket with the
passenger sitting next to you on a flight? Many of you have no doubt done
this at one time or another. Chances are the person seated next to you may
have paid more than you, for the same flight. Or maybe you were the poor
sucker and paid more! Worse still, some people seated in first class may
have paid less for their seats than you did for your uncomfortable middle
seat way at the very back of the aircraft. Is this fair?
Welcome to the crazy, illogical world of airline pricing. This week we
attempt to explain why the airfare you paid may differ from someone else …
and how two people from the same company travelling to the same meeting
may pay different fares.
Unlike paint or other consumer products, pricing airline seats is a
complex process. The number of published airfares between any two cities
is based on a system of yield management which is itself based on a number
of factors which include historical demand patterns, available supply,
competitive factors, guesstimates about future need and numerous other
variables. The result: the baffling array of prices for the same product –
an airline seat!
Airline Issues & Concerns:
For every flight airline yield managers or revenue controllers
constantly monitor seat availability and adjust prices as customers
purchase … or don’t purchase … as competitive factors intrude and as the
flight date and time approaches.
Seats on any flight are a highly perishable commodity. Once the plane
has taken off, empty seats signify lost unrecoverable revenue. The closer
to departure for each flight, the more critical it is for the airline to
sell seats that remain unsold.
Airlines continually struggle with the contradiction that the more they
sell cheap tickets, the more they also want and need to sell expensive
tickets! There is also the concern that the seat they sell at a discount
might have been able to be sold at a higher price.
People fly for different reasons. Some people fly because they have to;
some fly because it is more convenient, others fly because it is cheaper,
and others fly for indulgence (for a vacation) or because they want to.
A person that needs to travel urgently today for tomorrow is probably
willing to pay a premium for the seat because he/she must travel. Airlines
prefer to sell these 'last minute' tickets for high prices but would be
satisfied to accept a lower fare for people that would only travel if it
is a bargain fare! The closer to departure it gets, the less valuable the
tickets are to the airline, but hopefully the more valuable the tickets
are to you the potential traveler. It all depends on the status of the
Some flights are simply more popular than others, maybe because of time
or day, day of week, time of year, non-stop vs intermediate stops. A
flight at 2am is not as popular as a flight at 8am. And a flight on
Wednesday is probably not as popular as a flight on Friday.
And so, airlines have to confront these challenges (and many more!) and
somehow come up with an airfare structure that enables them to sell as
many tickets as possible per flight, and at as high an average fare as
Seat Inventory & Availability:
Seats on any flight are priced at different prices to appeal to the
different types of travelers. For example, a flight between Miami and
Orlando could be priced at $100 roundtrip to appeal to a bargain hunter
looking for a cheap vacation, maybe $150 for people that will then fly
because it is cheaper than driving, maybe $225 for people that will fly
because it is more convenient than driving, and $300 (or more) to people
that absolutely urgently have to get to Orlando as quickly as possible.
Each fare level is given a fare code (V,M,B etc) and a number of seats
allocated at that fare. These are commonly known as ‘buckets’. Each fare
is subject to a number of booking and ticketing conditions such as dates
of travel, length of stay and such. This inventory of seats is loaded into
computerized reservation systems (CRS) such as Sabre and Amadeus.
The seats are available for sale on-line and in real time to thousands
of travel agents and airline offices worldwide as well as through consumer
internet sites such as Travelocity and Expedia. Seat availability for any
flight can be viewed and reservations made and/or cancelled at any time
anywhere in the world. Small wonder that the availability of seats for a
particular flight varies from one minute to another!
Say you have two people traveling together. Your travel agent will
check for availability on a particular flight. If there is high demand for
that flight it is likely that there may be only one seat available at the
lowest fare. In such instances one passenger is booked at the lowest fare,
and the second passenger is booked at a higher fare because that is what
is available. Travel agents can only sell what is available. This is the
primary reason for differences in fare quotations from one person to
Another reason is when the ticket is issued. Remember that each fare
has governing rules … one being the ticketing time limit (TTL) – the
deadline date for issuing the ticket. If this deadline passes and the
ticket is not issued, there is no guarantee of seat availability at the
originally quoted price.
Consumer Issues – Timing is Critical
The Trinidad & Tobago market is price-driven and everyone wants the
cheapest fare, not withstanding the fact that these fares are usually the
most restrictive. The airfare you pay is primarily a function of timing
and availability: when did you make the reservation, what fares were
available and when was your ticket issued?
Was it three months in advance when the cheap (lowest fare) inventory
was available? Or was it two days before your planned travel date …. at
the height of the busy summer season … with only the most expensive
‘bucket’ was available? Was your ticket purchased and issued at the time
of reservation or did your ticketing time limit lapse resulting in
cancellation and re-booking of your reservation at which time the cheap
seats were no longer available?
Airfares are obtained on a ‘first come, first booked, first ticketed’
basis. Advertised fares are not the same as available fares… And yes,
cheap fares simply do sell first! The mechanics of airline seat pricing is
irrational to the average human being, however until a simpler system is
developed by the airlines we work with the system we have.
The secret to obtaining the lowest available airfare is to plan your
travel, make your reservations and purchase your ticket well in advance of
your proposed travel dates. Yes … there are instances when you may ‘luck
out’ and get a bargain a few days before your date of travel … But that is
the exception rather than the rule! Tickets purchased in advance are
usually cheaper than tickets purchased at the last minute.