Why flight prices change and how to decide when to book.
Most airline costs are fixed as soon as the airline decides to offer a flight (a plane costs the same amount to fly regardless of how many passengers it has or who those passengers are), meaning that in order to maximise profit, the airline needs to increase its revenue. It does this by building profiles of their customers and flight routes and then building extremely advanced software to calculate the best possible price at any given time. So how do airlines work out their flight prices and how can we get the best possible price?
How do airlines decide how to set flight prices?
Airlines want to sell as many tickets as possible for the highest possible price. So, this is what they do:
Keeping flight prices high leaves the risk of empty seats, so airlines build customer profiles based on how flexible they are with regards to dates, cost etc. Some typical examples of customer profiles include:
- The family vacation: typically booked several months in advance. Customers are cost-conscious but often have some restrictions on dates they can travel (I’m sure everyone is aware of half term flight prices!).
- The student holiday: typically booked a couple of months ahead. Customers are very willing to search for the cheapest locations, dates and prices.
- The business trip: typically booked quite last minute. Customers tend to be willing to pay almost any price since dates are often inflexible and the cost is often covered by the company.
Business fares are the golden tickets for airlines since they can often be sold at double or more of the price other groups would be willing to pay, but empty seats are completely wasted. This is where the airlines’ software comes in. It looks at the sales made in previous years and then predicts how many business / leisure sales the airlines can expect in each week at certain prices. As they generally get more business sales closer to the date of the flight, prices typically go up as the date of the flight gets closer. How fast the flight prices rise and how often depends on how the airlines’ sales have gone compared to what was expected.So, I should just book flights as early as possible?
Not necessarily. There are a number of situations where flight prices can drop rather than rise:
- Buying as soon as they go on sale can also be expensive. Airlines often run more expensive tickets for the first few weeks that tickets are on sale to catch people who have been planning trips for a long time and may be less price conscious that flight prices could go down.
- Routes rarely used by business travellers tend not to rise as dramatically. While a flight to New York or Frankfurt is likely to rise rapidly as the flight date gets closer, flights to Malaga or Venice tend to be much more stable, making it less risky to wait in hope of a price drop.
- Airlines often release cheaper ‘pots’ of tickets on Monday and Tuesday mornings, then more expensive ones later in the week. This is because more cost-conscious travellers often scour flight prices daily looking for a good deal, while business travellers tend to buy towards the end of the working week and more financially flexible leisure travellers use the weekend: Skyscanner found that buying tickets on a Tuesday instead of a Thursday often saved more than 15%!
- Beware though that while this is often true, it is no guarantee so if you see a sudden price drop on a different day then take it. If an airline is selling far fewer tickets than expected and fears having empty seats, flight prices can drop dramatically. Remember those student holidaymakers I mentioned before who were flexible with dates and locations but not limited budgets? ‘Seasonal offers’ and other such promos can be used to quickly fill planes with cost-conscious travellers if sales are not going well.
This all sounds very complicated. How do I decide whether I should buy now or wait?
Buying as early as possible is undoubtedly the safest option, however if you can put in the time to check regularly, here are some tips to help you find the best flight prices:
- As flight dates approach, prices become more volatile, so the risk and reward are much higher! Airlines tend to begin adjusting their prices more rapidly and heavily in the final three months before departure.
- This means that if you are flexible with dates and/or location, you can take advantage of volatile last-minute pricing, or use apps like Fareness and Secret Escapes to find last minute deals.
- However, if you are not flexible, booking late can be very risky. On average, flight prices will go up so if you have a small number of flights to choose from, the risk is high and the potential for reward low.
- Similarly, if you are still a long way from the flight date, prices are likely to be less volatile and so the risk of waiting for a good price is lower.
- You can set up alerts with comparison sites such as SkyScanner which notify you when flights you are interested in go up or down in price.
- There are also a number of apps which predict how flight prices change, i.e. if they will go up or down. The most popular of these are Hopper and Kayak. Their advice is based on huge sets of data from previous years. Just remember that there is no guarantee that this year will fit the standard!
Useful websites and apps for finding the best flight prices
Flight comparison sites
These websites focus solely on finding you the cheapest flight tickets and earn money from advertising and sponsored listings. Most also offer flight tracking services which update you when flight prices change.
Online Travel Agents
These websites typically book flights for you as well as offering larger packages including hotels, transfers etc. As they often bulk buy tickets at discounted prices from airlines, however they also tend to charge 10-15% commission. As a result, depending on the variation in flight prices they can be cheaper or more expensive than booking direct.
Flight price prediction
These apps act both as flight comparison sites and also aim to predict whether flight prices will rise or fall.
- Hopper.com (you need to download the app)
Hidden city ticketing
Skiplagged.com offers a unique way to find cheaper airline tickets. Sometimes booking a flight beyond your planned final stop can be cheaper and your intended destination is just a stopover. For example, you might book a flight to Innsbruck with a stopover in Hamburg (your destination) for a lower price than booking a flight to Hamburg, then simply not get on the second leg of your journey.
Myth busting flight prices
Myth: Buying round trip tickets together is always cheaper
This used to be true when the cheap airline market was dominated by a few large companies, but with the cost of entry to the market falling and many formerly ‘premium’ airlines such as British Airways cutting costs and prices, it can be cheaper to buy tickets for each leg of your journey from different airlines. Look up which airlines fly the route you are travelling, and you may find it cheapest to fly out with one airline and back with another.
Myth: Flight comparison sites always find the best prices
This is usually true, especially if you check multiple sites. However, some airlines may reserve small numbers of cheaper flight tickets to sell directly, or some flights may simply not be listed on comparison sites. So, make sure to check which airlines fly the route you are looking for and check the airlines’ websites as well!
Myth: Booking directly offers the best flight prices
Travel agents often bulk buy flight tickets at discounted rates which can more than make up for the commission they charge. They may not always be cheaper but can be depending on how flight prices vary. Basically, you need to shop around!
Myth: Budget Airlines are the cheapest way to fly
As noted in the previous myth, the line between ‘budget’ and ‘premium’ airlines has become increasingly blurred. In addition, flight prices alone don’t always tell the whole story. Make sure to check things like baggage fees, seat fees, Wi-Fi and food costs before you book. Luggage fees alone can be in excess of £40 per item and once you have added on all the extras you need, you might pay the same with the budget airline as you would with the premium airline!I hope this has given a useful insight into why flight prices change and how we can beat the system. It’s no different to shopping around for anything else: If you have the time and want to save your pennies, there are plenty of ways to find the cheapest products. And if your time is limited, there are at least a few tips here that will save a little money with little effort – just setting up a notification to find out when flight prices will drop is a great starting point to beating the system.