9:36 PM EDT, March 19, 2013
In the last Travel Mechanic column, I examined the fare prognostication tools used by Kayak and Bing, which advise travelers whether to buy plane tickets while searching those websites or to wait. Both sites use data from scores of past searches to predict whether you're finding a fare at its lowest point or if it may fall.
I examined about 10 random routes and dates of travel, and the companies were generally united on their predictions, with one exception: For a hypothetical trip from Los Angeles to Portland, Ore., in mid-April, Bing and Kayak both brought back the same fare — $178 on both Delta and Alaska airlines — but differed in their recommendations.
Kayak said with 85 percent certainty to buy. Bing said to wait with 75 percent confidence.
Who won? Bing.
A week later, the price had fallen to $158.
And that led me to a simple question: Why must we spend so much time guessing whether fares will rise or fall?
Darren Rickey, a vice president at Sabre Airline Solutions, said prices are in constant flux for a simple reason: Airlines are trying to fill planes. He said they see passengers as two types: business, with flexibility on price but not on dates, and leisure, with more flexibility on dates and wanting to spend as little as possible. The airlines know they will be able to fill the plane at varying price points.
"They ask themselves, 'How many seats do I need to sell at $1,000, $500 and the cheapest level, knowing I don't want to fly with empty seats?'" said Rickey, who has worked in airline revenue management for an Australian carrier. "They don't want to fly full at the cheapest fare if they can upsell some people."
And they always can.
Airlines are trying to figure out how to fill flights months ahead of time and usually long before anyone actually is thinking about getting on those flights. They know that the earliest people to book on a typical flight will be leisure travelers, and they will be enticed with decent, but maybe not the best, prices. Airlines don't want to sell too many tickets too soon, however.
"You want to leave plenty of seats available, because you know plenty of business travelers will book in the last couple of weeks," Rickey said.
About 45 days out, he said, airlines begin considering whether they have sold enough seats on a particular flight. If the answer is no, as it often is, that's when the most appealing prices pop up. And, indeed, conventional industry wisdom says the optimal time to buy a plane ticket is three to four weeks before departure, the sweet spot between early bookers and last-minute shoppers.
Meanwhile, airlines are responding not only to their own loads but to competitors' sales, a key reason that many analysts say consumers can't afford for the industry to become any further consolidated.
Not jumping too early or waiting too late turns out to be the best practice for airline customers. That, a little guessing and a little luck.
The Travel Mechanic is dedicated to smarter, more fulfilling travel. Thoughts, comments and suggestions can be sent to email@example.com. Include "Travel Mechanic" in the subject line. Follow him on Twitter at @traveljosh.
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