Planning Perspectives

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From personal to professional, from family to financial, there are many facets to your life. Yet, each is interconnected. Planning Perspectives is a source of ideas and information to help you make the most of them all, all together.


The Ups and Downs of Airline Pricing

December 14, 2017 Lifestyle, Living Well, Travel

Are your holidays taking you skyward? Remember these common reasons why the price of a single flight may change from one day to the next.

Planning a vacation or trip can be an expensive investment of time and money, especially if air travel is involved. Many travelers compare deals for their airfare but often discover the price for a flight can fluctuate, sometimes multiple times, in a short amount of time. While there are many opinions and theories about the best time to purchase the cheapest airfare, here are the most common factors that cause the price, of any particular flight, to fluctuate.

  • Demand – Pricing is primarily based on demand and travelers should expect to pay more during peak travel times like Thanksgiving and Christmas or for special events like the Stanley Cup finals or the Calgary Stampede. The destination is also part of this equation; think flying south for spring break.
  • Revenue management – While many airlines allow travelers to book flights up to a year in advance, they don’t actively analyze the supply and demand specifics until approximately four months out, often changing prices as a result of the analysis. This process of attempting to match demand, travelers, time and price in an effort to maximize sales is called revenue management and is a common practice among airlines, hotels and car companies, and others.
  • Route specifics – Another offshoot of demand; airlines will change the size or type of the aircraft or change departure times if a route can be more profitable, resulting in pricing changes.
  • Reacting to a competitor – If a competing airline offers a sale or enters a competitive market, other airlines are likely to react and match the competitor’s price.

Despite its volatility, one cost that’s not behind frequent near-term fluctuations in the ticket price is fuel. Airlines are disciplined about controlling capacity and don’t add flights solely because of cheaper fuel. Additional flights come with more infrastructure-related and staffing costs making added capacity hard to remove when fuel prices inevitably increase.

Travelers should be aware of an airline’s rebooking or cancellation policy before purchasing a ticket, just in case a better deal is yet to come.