How Airline Tickets are Priced

The question featured in the title is very popular among frequent flyers for a good reason. While looking for cheap discount flights online you can see that the same route can cost twice as much from one day to the very next day. Weird, right? However, once you finish reading this post you might have a better understanding of how airline tickets are priced.

Factors that Influence Ticket Price

“The airline industry, unlike many other industries, is selling perishable items. When that date expires, we know we no longer will have an opportunity to sell that seat ever again,” says American Airlines strategy analyst David Ferrel from Revenue Management department. “There are literally hundreds if not thousands of factors going into that airfare that customers are seeing. Such as seasonality, holidays, taxes, fees, weather.” Yes, even the weather plays a significant role in the final price that you get when requesting a price quote from ASAP Tickets agents or any other travel agency. “If there hasn’t been snow in Colorado for the entire winter season and no one is going skiing there, then demand will be low and we will have lower airfares there,” explains Amy O’Brien, American Airlines strategy and market analyst.

Fuel price

The other top factor is the fuel price. This has been going up for the last couple of years and so are the airfares. Another important aspect is competition. The airline industry is very competitive and there are very few markets that have less than two airlines competing for traffic. And what is the best way to win over the customer? Cheap airfares of course! When the competition is high, airline ticket prices go down. This is why you shouldn’t be surprised by the fact that a trip of 1000 miles costs you half of the price of the trip for 500 miles. It’s purely competition driven.

Demand-based pricing

One more layer is demand-based pricing. How many people want to travel on this exact date and this exact time? The more people looking for these dates, the more the airlines charge. This is exactly why winter holidays and summer months, as well as some national holidays, are insanely expensive to travel in. Yet cheap airline tickets are easy to stumble upon in October and November.

Limited inventory problem

Last, but not least comes a limited inventory problem. Every plane has a set number of seats. Booked seats are taken out of the inventory thus increasing the demand. This naturally increases the fares for remaining seats on the flight. At the same time, someone else might change their mind and cancel the booking. This brings some seats back on the market and changes the airfares again. It’s impossible to predict how many seats and for what price will be left within a week, a month or 3 months from departure. Due to the above mentioned, it’s also a common situation that you get a price quote for a certain sum and decide to take time to shop around. Then when you come back ready to book the price is already 10-30% higher.

When is the Best Time to Book Plane Tickets?

Well, you are not the only one wondering. As you’ve already noticed, airline pricing, optimization and availability cycles, all put together, form a very complex system. So, finding cheap airline tickets is more of a gamble than strategy. This is exactly why all industry experts have one and the same answer to the popular question “When is the best time to book plane tickets?”. The answer is Book Now! Things are too complicated to try to analyze and predict. Therefore just choose one of the best airlines, secure seats and start packing for your trip!

And what about $100 flights? Are they real? Read to find out!