When Airlines For America, the advocacy group for the airlines, pulled together a conclave of industry types in D.C. this week, a lot of the conversation was stuff the average flier doesn’t much care about. But there were a couple of insights worth sharing.
Though it may be common knowledge to frequent fliers, have you ever wondered why tickets are cheaper if you stay over Saturday night?
“There’s no variable in the cost to the airline,” said Scott Nason, a consultant and former American Airlines vice president. “They calculate that the customer who is staying over Saturday night is more price sensitive.”
Business fliers, who tend to have the deepest pockets and tightest schedules, want to be home by Saturday night. Weekend travelers, not so much.
Nason and Bill Brunger, a former Continental executive, lead a fascinating discussion of ticket prices, with this takeaway: The airlines are gambling on supply and demand. They also gamble when they overbook. Since some passengers booked on a flight don’t show, the airline loses money. But if it overbooks too much, the payout to passengers who get bumped costs them money.
The science of figuring that all out has spawned books, dissertations and a journal, and MIT usually awards someone a Phd for it each year.
From the time a flight is first scheduled until the day the plane takes off, the airlines recalculate and change prices every day. So, when’s the best time to buy your ticket? Brunger said he asked three people working in the field — it’s called “revenue management” — and got three different answers. But here’s his advice:
“Don’t buy your ticket too early because airlines hedge bets early out on the conservative [more expensive] side,” he said. “Particularly if you’re traveling in an off-peak season, don’t book too early because there may be a sale. Book early, but not too early. Book at a satisfying price to you and don’t look [at prices] anymore.”
Nason generally agreed but added one caveat that applies to the Washington region’s airports.
“If you’re in a Southwest [Airlines] market, wait until their fares come on line, usually six months out, to see if their fares affect the market,” he said.