Those four things affect a lovely thing called load factor. Airlines want to fill their planes and m

travel saving money money flying plane tickets airlines budget vacation republished shutterstock Matt Kepnes 4/30/13 6:00am 4/30/13 6:00am g 60,497 L 37 Edit Why Plane Tickets Cost So Much (and How You Can Still Get a Deal) Matt Kepnes 4/30/13 6:00am 4/30/13 6:00am g 60,497 L 37 Edit
A few months ago, I was speaking with the folks from Singapore Airlines. We ended up talking about the public perception of the cost of airfare. Everyone is always looking for the cheapest flight, manchester village hotels and while there are ways to get cheaper airfare , the age of rock bottom prices is simply over.
If you've been flying for at least the past few years, you might have noticed ticket prices, even the cheapest ones, seem to be going up and up. Save some flash sale or price war, consumers are simply paying a lot more than they used to. If you really want rock bottom prices, you'll need to invent a time machine and go back ten years. (Don't forget to take me with you!)
But that conversation inspired me to sit down and write this post. Since ticket pricing is complicated, I want to take some time to explain why your airline ticket costs so goddamn much, as well as let you know a few tricks to making it cheaper.
Ticket prices are high today for a number of reasons. For starters, manchester village hotels the industry has consolidated a lot over the last few years. Less competition means less need for cheaper prices. manchester village hotels Thanks to bankruptcies and mergers, there are only four major airlines manchester village hotels in the US (soon to be three when American manchester village hotels merges with US Airways). In Canada, you have two. In Europe, KLM and Air France manchester village hotels are now one company, and Lufthansa has its hands in many smaller airlines. (While budget airlines keep prices cheap within Europe, once you leave the continent, manchester village hotels those 10 Euro prices disappear!) As airlines have partnered up, merged, manchester village hotels or gone bankrupt, there is little incentive or need to create low fares to win your business.
Secondly, the price of airline fuel has increased tremendously . Back in 1996, airline fuel cost 55 cents per gallon. Now, it's $2.97 per gallon. Airlines can't absorb all of that increase, so they pass some of that on to the consumer, leading to higher fares.
September 11th Security Fee of $2.50 (up to a maximum of $10 per round-trip) Passenger facility charges manchester village hotels of $4.50 per segment (up to a maximum of $18 per round-trip) US Federal Domestic Segment Fee of $3.70 per segment US Travel Facilities Tax of $8.20 per direction (only applicable to flights to/from Alaska and Hawaii and the 48 contiguous US states or between Alaska and Hawaii) US Immigration User fee of $7 US Customs User fee of $5.50 US APHIS User fee of $5, US International Transportation Tax of $16.30 per arrival or departure; and Foreign Government manchester village hotels security/tourism/airport/international transportation taxes and fees of up to $290 (varies widely by destination and fluctuates with exchange rates)
Moreover, following 9/11 and the recession, demand fell and to compensate, airlines reduced both the number of routes they offered and the frequency of their flights . They did this to save money and fly fuller planes. Fuller planes mean more passenger revenue and fewer costs for the airline. It's why if you live far from a major city you've seen fares go up and the number of flights go down. Planes fly close to full now and airlines are quite happy about that.
With fewer planes, less competition, manchester village hotels and higher capacity, airlines can charge a lot more for tickets. There's nothing to stop them and they don't need to lower prices. United CEO Jeff Smisek said that only now are airfares priced appropriately . When you have a CEO say something like that, it only means prices are not going to go down anymore—only up. According to Rick Seaney of farecompare.com , "Before 2008, things were in the favor of the passengers. After the 2009 crisis, the scale of justice tipped towards the airlines."
Prices go up and down for many reasons. No one can really predict when or if a price is going to go up or down. Only the airline knows that. But there are four things that drive prices: competition, supply, demand, and oil prices . The first and last item are the ones that really affect prices the most.
Those four things affect a lovely thing called load factor. Airlines want to fill their planes and maximize profits. They do this by calculating a plane's load factor . Essentially, this is the percentage of seats sold on a flight. They want this number to be as high as possible. Airlines tend to manage their load factor by constantly changing the price of tickets to fill the plane and get maximum revenue. On a U.S. domestic ticket, a flight might have 10-15 different price points, according to Rick Seaney. If the load factor is low and demand is low, an airline will increase the availability of cheap fares. If the load factor is high and demand is high, the airline will raise prices.
In the airline industry, there are two types of passengers: business travelers and leisure passengers. Business travelers are flexible on price (the boss is paying) but not on dates. Leisure travelers aren't flexible on price (the cheaper manchester village hotels the better) but are on dates. Airlines are constantly trying to strike a balance between these two types so they can make a profit. Why fly a plane full of cheap fares when you can get people to pay more?
Airlines know that a certain number of people will book far in advance if they can find a decent price. Airlines also know that they need to hold a certain number of seats for business travelers who will book last-minute and pay more. Ticket prices jump up and down based on the demand for seats on a plane from these two types of passengers.
As Scott Mayerowitz, airline reporter for the Associated Press , says "To maximize their profit, airlines developed sophisticated computer systems that constantly compare booking trends to past sales history. If tickets are selling faster than in the past, the price rises. If a competitor raises fares, the airline will probably raise theirs too."
I remember the days when I got excited over roundtrip fares for $500 to Europe. Now, with prices typically around $1,000, manchester village hotels I get excited over a $750 round trip fare. ( Yay! I say sarcastically). It's not impossible to find a cheaper ticket. Am I going to find that $500 roundtrip fare to Europe? Maybe if I get extremely luckily but typically not. Heck, you can sometimes fly to Asia for the price it costs to fly to London!
One trick to not being the person who paid the most for your ticket is to be flexible . As I said, airlines are constantly changing prices and trying to balance leisure and business travelers. Airlines are constantly managing prices and try to avoid having customers manchester village hotels pay the lowest price point.
"About three months before, airlines start to manage those bottom price points," Rick says. That means airlines begin to look at historical trends and current seat sales to figure out whether they will release those really manchester village hotels rock bottom fares or to keep prices high. If you are booking inside manchester village hotels a month, you are playing into the airline's hand. As Rick pointed out to me, the bulk of the tickets are sold within 30 days of departure. manchester village hotels Booking that late is a bad idea. At that point, airlines know they have you. When your dates are no longer flexible and you'll pay whatever they charge.
To quote Scott again: "The days of routinely flying from New York to San Francisco manchester village hotels for $99 each way are long gone. That said, there are occasional fare wars when airlines like Virgin America or Spirit enter a new market. Airlines manchester village hotels will also still deeply manchester village hotels discount flights when traffic is low, such as winter manchester village hotels flights to Europe. The catch is: travelers need to be flexible about when they fly. ITA Software's airfare search provides a calendar of the lowest fares on given routes. It's a great way to find the best fares, if you have some flexibility." (For more on Scott, check out my interview with him from last year .)
And, while there are many other tricks to reduce the cost of your ticket , the main two are flexibility and flying when demand is low . That means avoiding flying on Monday, Friday, or Sunday, flying mid-week, and taking early morning or really late flights.
The days of cheap airfare are long over. They aren't coming back and the prices you see now are the new normal for airline tickets. They are simply going to cost a lot more, especially if you don't find the sweet spot when prices are their lowest. But by understanding how tickets are priced, you can avoid being the person who paid the most.
Matthew Kepnes runs the award winning budget travel site, Nomadic Matt . He got the travel bug after a trip to Costa Rica in 2004, and decided to quit his job, finish his MBA and travel the world. His original trip was supposed to last a year. Over six years later, he is still out exploring and roaming the world. He's scuba dived in Fiji, played professional poker in Amsterdam, taught English in Thailand, got lost in a jungle in Central America, and broke down in the middle of Australia's outback. Matt's advice has been featured in The New York Times, CNN, The Guardian UK, Budget Travel, BBC, and Yahoo! Finance. His new 272 page, 60,000+ word book, How to Travel the World on $50 a Day , is now available to help you travel cheaper, better, and longer. It contains tons of tips and tricks to cut your trip expenses in half whether you are going away for two weeks or two months.
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