The days of cheap airfares are long over. They aren't coming back, and the prices you see now are th

A few months ago, I was speaking with a representative of Singapore Airlines, and we ended up talking about the public perception of airfare costs. Everyone is always looking for the cheapest flight. 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 that ticket prices, even the cheapest ones, are going up and up. Save some flash sale or price war, consumers are just 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!)
That conversation inspired me to sit down and write this post. Since ticket pricing is a complicated and arcane subject, flight options search depart travelocity I want to take some time to explain why your airline ticket flight options search depart travelocity costs so goddamn much, as well as share a few tips on how to still get cheap airfare .
Ticket prices are high today for a number of reasons. For starters, the industry has consolidated a lot over the last few years. Less competition means less need for cheaper prices. Thanks to bankruptcies and mergers, there are now only four major airlines in the US (soon to be three when American merges with US Airways). flight options search depart travelocity In Canada, there are two. In Europe, KLM and Air France 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, those 10 Euro prices disappear!) As airlines have partnered up, merged, or gone bankrupt, the incentive to create low fares to win your business has mostly disappeared.
Secondly, the price of airline fuel has increased tremendously . Back in 1996, airline flight options search depart travelocity fuel cost 55 cents per gallon. Now, it’s $2.97 per gallon. Airlines can’t absorb flight options search depart travelocity all of that increase, so they pass some of that on to the consumer, leading to higher fares.
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 flight options search depart travelocity 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, and higher capacity, airlines can charge a lot more for tickets. There’s flight options search depart travelocity nothing to stop them, and they don’t need to lower prices. United CEO Jeff Smisek said that only now are airfares priced flight options search depart travelocity appropriately . When you have a CEO say something like that, it means prices aren’t going down anymore — only up.
Prices go up and down for many reasons. No one can really predict when or if a price will change. Only the airline flight options search depart travelocity knows that. But there are four things that drive prices: competition, supply, flight options search depart travelocity demand, and oil prices. The first and last items are the ones that really affect prices the most.
Together, those four things all affect a lovely thing called load factor. Airlines want to fill their planes and maximize profits, and 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 flight, there might be 10–15 different price points, according to Rick Seaney.
In the airline industry, there are two types of passengers: business travelers and leisure flight options search depart travelocity passengers. Business travelers are flexible on price (the boss is paying) but not on dates. Leisure travelers aren’t flexible on price (the cheaper, flight options search depart travelocity 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 from these two types of passengers.
As Scott Mayerowitz, flight options search depart travelocity 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.”
To avoid being the person who paid the most for their ticket, you need to be flexible. As I said, airlines are constantly changing prices and trying to balance leisure and business flight options search depart travelocity travelers; they ll do their best to avoid having customers pay the lowest price point.
“About three months before, flight options search depart travelocity airlines start to manage those bottom price points,” Rick says. That means airlines flight options search depart travelocity begin to look at historical trends and current seat sales to figure out whether they will release those really rock-bottom fares or keep prices high.
If you’re booking inside a month, you’re playing into the airline’s hand. As Rick pointed out to me, most tickets are sold within 30 days of departure. Booking that late is a bad idea. At that point, airlines know they have you. When your dates are no longer flexible, you’ll pay whatever they charge.
To quote Scott again: “The days of routinely flying from New York to San Francisco 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 will also still deeply discount flights when traffic is low, such as winter 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.”
flight options search depart travelocity 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 flying mid-week, taking early-morning or late-night flights, and avoiding flying on Monday, Friday, or Sunday.
The days of cheap airfares are long over. They aren’t coming back, and the prices you see now are the new normal for airline tickets. They are simply flight options search depart travelocity 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.
Taxes are awful, and I ve started adjusting where I go based on airport taxes. flight options search depart travelocity Take the Caribbean: taxes to Puerto Rico are $5 but over $100 for the Dominican Republic. Same beaches, same ocean. (The DR is cheaper overall, so it might make sense to get that pricier ticket if for a longer trip).
I have the most success with fares when I book as early as possible. My plans are often really inflexible because of my work schedule, flight options search depart travelocity so I need to leave at specific times. When I book really early, I m more likely to cheaper seats at the exact time I need to leave. Yes, I miss out on last minute fare sales, but the fare sales often don t work with my schedule anyway.
Kay, I ve done a lot of research on taxes and fees. In my recommendations for finding cheap flights, flight options search depart travelocity I tell people to consider taxes when flying. The more airports you fly into, the more you will pay. Sometimes it may be cheaper to break up your flight into segments.
I did an entire feature on taxes and fees (see my comment below) and was quoted in The Washington Post in an article about airline taxes. People now see the total costs of their flights (rather than just the airline advertised price) but I still don t think people really understand the impact taxes and fees can have.
Thanks for pulling all this together Matt and explaining it. Those free credit card frequent flight options search depart travelocity flyer miles you talk about in your book are even more valuable to help offset higher fares. Your advice helped when I received a 35,000 signup flight options search depart travelocity bonus in the mail and decided to act on it. Thanks Matt!
Thanks for this really in-depth, informative post, Matt; I really learned flight options search depart travelocity a lot about how tickets are priced (and got a little depressed flight options search depart travelocity that they’re going to stay at high prices). Guess it’s time for me to start researching travel hacking haha!
I remember when I was able to fly RT to Buenos Aires for a mere $600 back in 2008. Today, I only see offers for double that price (or higher!). We can pretend to beat the system and be smarter than airlines, but reality is that the joke is on us this time around. Still, flight options search depart travelocity pretty informative article.
Great information, flight options search depart travelocity Matt. I was surprised when 60% of the cost of my flight to Croatia last month was taxes. Maybe that cost will go down once there are direct flights from USA to Croatia (one less European flight options search depart travelocity airport the airlines have to pay).
This was an interesting read and a good thing to keep in mind while buying tickets and trying to not get frustrated over prices. I know in my brain that fuel and taxes cause the prices to go higher, but then I remember when I was 19(*only* 13 years ago), I flew to London(from Chicago) for $200. Sure it was in January, but it was $200!
When I was in college in the early 00s I would see STA advertising $200 NYC-London flights every winter. When I was studying flight options search depart travelocity abroad, I walked into an STA office in Germany around Thanksgiving and bought a round trip ticket home over Christmas for about $350. Round trip! I don t recall the routing flight options search depart travelocity being particularly inconvenient either.
Good article. I use Kayak to compare prices as it ll show you the prices up to three days on either side of your preferred departure date, or even an entire month if you can be that flexbible. And they have a flight tracker feature which is very handy.
Even with flights costing so much, generally speaking, I still feel lucky I can afford to travel