Travel Forum / Travel Types / Air Travel / April 2005

It's called yield management.  The airlines have it down to an art
form.  The objective is to get the most amount of money they can from
each flight.

At one time, the airlines sold all seats for the same price, but then
decided that they could attract additional money by offering discounts
for people willing to book far in advance. Those people tended to be
people who didn't normally fly, so the airlines were able to attract
additional passengers to their flights, along with additional revenue,
without jeopardizing their base ridership.

The process has evolved to the point where the airlines know which days
will attract more passengers, like the start and end of spring break,
the Christmas holidays, and Thanksgiving.  They price seats higher on
those days.  They also know the days when it will be harder to fill
aircraft, like mid-week in February to Europe, when they will drop
prices to attract additional traffic to fill their planes.

Their general strategy is to set an initial price, based on how many
seats they expect to fill.  They monitor how quickly the seats are
selling, and adjust the price upward until they feel they will get the
highest price they can on average, while still trying to fill the
aircraft.  Occasionally, they will raise the prices too quickly, and
back off a bit as the date of the flight gets closer, but that doesn't
happen very often.

In your specific case, I would expect the price to rise further as the
seats fill up, particularly in the last 7 to 10 days before departure.
I wouldn't expect it to drop back to where it started from.

Capitalism.  It might come down, but the cheap seats usually go first.  The
closer the date (and that is high season in the US) the higher the price.

In the past couple years, many of the major U.S. airlines have been
scrambling to offer $231 fares on all kinds of flights, in order to fill up
their planes ahead of the competition.   The result has been (and with
rising fuel prices this is even more extreme) that a plane leaves with every
seat sold--and every one of these full-to-brimming flights loses money for
the airline.

Travel is up--plenty more planes are going out full--why should they lose
money on every flight?  They may as well start high-balling instead of
low-balling, and if there are too many empty seats late in the game there is
always the option of doing some late minute dumping.

One good tracking option is to set up a "fare watch" at Orbitz or
Travelocity where you will get an e-mail if the fare goes down below the
price you specify.  Another related strategy is to purchase the going fare
with an airline that will allow you a credit voucher for the difference if a
fare goes down--and when you hear that fares have dropped for the market,
you can check and see if your booking has gone down too (though the specific
flights you are booked on will have to have gone down in fare--not just a
general drop for your travel dates).

EatMoPie schrieb:

If only 72 % of those who would have accepted $300 also accept $414,
it's a good deal for the airline.

Regards, ULF