Understanding Airline Ticket Prices: Why a Seatmate’s Airfare Costs More or Less than Yours

Airplane wing in the sky

Think you have the cheapest airline ticket? Maybe you do. But maybe the guy sitting next to you on your flight paid less. Welcome to the crazy world of airfare pricing! The good news is, once you gain a full understanding of airline ticket prices, it’s easy to find good deals. Here’s how to save every time you shop for airfare.

Why airfares differ

All airlines price each and every ticket to maximize profits. One way to maximize profits is by gauging seasonal demand and this happens in all businesses.

Example: Just before Christmas, a department store sells a sweater for $100. After the holiday, the sweater might go on sale for a mere $30. That’s because the holiday demand has dried up. This is similar to what happens with airfare though it’s a bit more complicated.

How seats are priced

A typical domestic flight has about 10 different ticket price points per plane. First or business class tickets are the most expensive price points with economy seats at the low end. Now, some of the reasons for the different prices.

When you buy matters: The most expensive fares in business or economy class are typically purchased at the last minute by business travelers and last minute fares are almost always very pricy. Leisure or vacation fares are generally cheaper because they’re usually purchased well in advance.

Competition: Fares to smaller cities with little airline competition are typically more expensive than fares to big cities with lots of different carriers.

Distance: The farther you fly, the more you’ll pay; and while this is often true, it is not true for every route.

Demand: Airlines know when people want to fly, such as summer and major holidays; they raise prices during these peak travel periods, knowing people will pay.

Seat supply: Airlines don’t want to fly empty seats so they’ve become extremely efficient in calculating when and where we want to fly, year-round

Fuel: Oil prices have been down for the past few years which is good news for passengers; high jet fuel prices can mean expensive surcharges which are added to ticket prices.

Other fare variables

There are other variables that affect ticket prices but flexible travelers can overcome these hurdles.

Advance purchase: The cheapest airfare typically requires an advance purchase of at least 14 days before departure (though some low cost carriers have cheaper fares up until a week before departure).

Minimum stay: Some airlines require a minimum stay or a Saturday night stay for the best deal; this is less common than it used to be but still in force on some routes.

Departure day restrictions: Increasingly, the cheapest airline tickets require departures and/or returns on the least popular days to fly which are usually Tuesday, Wednesday or Saturday.

Flight time restrictions: In some cases, the best deals require departure during unpopular times to fly which means taking off at dawn, during meal times or overnight flights.

Route restrictions: Sometimes, a connecting flight can be a lot cheaper than a nonstop. Price out both to see if that’s true for your trip and if the price difference is worth the inconvenience of a stop along the way.

Purchase restrictions: Many airfare sales expire after only three days; other may last only a day or so. If you see a deal you like, hurry.

Blackouts dates: Airline sales typically black-out the most popular days of the year to fly, which includes sought-after dates around Christmas, New Year’s, Thanksgiving and peak-summer dates.

Best way to find the deals

Ready to shop? Try these simple yet effective tools.

Always compare airfares: Go to FareCompare and compare the prices to see which airline has the best deal. Check prices at the Southwest Airlines’ site, too; it’s the only U.S. carrier that doesn’t share airfare data.

Be flexible: The Getaway Map allows travelers to find the cheapest available flights within a particular month or season.

Set airfare alerts: If you know where you want to go, set a real-time airfare alert and let the deals come to you. If you like what you see, grab that fare quickly; you’re not the only one setting airfare alerts.

Now find a deal and have a wonderful trip.

Rick Seaney
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