Saturday, January 29, 2011

Do not buy your next airline ticket until you read this article! If may save you money...

Buying an airline ticket has to be one of the most frustrating and mysterious purchases one can make. In economics it is best explained through Price Discrimination, segmenting customers according to their willingness to pay.  We have been lead to believe that purchasing in well in advance is the best way to get a lower fare. Turns out, it may actually be the DAY and TIME you purchase your ticket is the key to getting a "deal" rather than the time lag.

WSJ: Whatever You Do, Don't Buy an Airline Ticket On …
""Rick Seaney, chief executive of FareCompare.com, studied three years worth of airline prices and concluded that 3 p.m. Eastern time Tuesday was the best time to buy. "That's when the maximum number of cheapest seats are in the marketplace," he said.""

This graph shows the dip in prices to major destinations during mid-week. I hope this helps you plan your next trip!
Wall Street Journal

This is only one part of this article. Click below to read the rest...I learned alot and hopefully I will be a more  educated ticket buyer the next time I fly!



 Shoppers looking for the cheapest airfare can learn something from stand-up comedians: It's all about timing.

Ticket prices are highest on weekends, on average, according to online travel agencies, fare trackers and airline pricing executives.
When's the best time to buy? Travel experts have long said Tuesday is when sales are most often in place, which is true. An analysis of domestic fares shows that Wednesday also has good—and occasionally better—ticket prices.

Though prices fluctuate frequently and the ups and downs of airline prices can frustrate and anger consumers, airline pricing actually does follow a cycle during the week. Many sales, in which some seats are discounted by 15% to 25% typically, are launched Monday night. That was true again this week when AirTran Airways launched a sale to all its destinations. Competitors typically match the lower prices Tuesday morning. By Thursday or Friday, many sales have already expired.

Two weeks ago, a Chicago-Atlanta round-trip ticket for April travel dates cost $209 on Tuesday and Wednesday on American and Delta, but then $301 for the next four days. When Tuesday rolled around last week, the fare dropped to $219 at both airlines for the April 8-15 itinerary. By Friday it was up to $307 at both American and Delta. Come Tuesday this week, the fare was down to $229.

"Like bread, fares get sort of stale toward the end of the week," said Bob Harrell, a fare consultant who has tracked airline pricing for years.

For this analysis, Mr. Harrell studied all fares filed by airlines over the past 90 days and found Monday was the busiest day for fare changes, followed by Thursday.

When airlines want to push through a fare increase, marking up their basic prices across the board usually by $5 or $10, they often do that on Thursday night, then watch to see if competitors match and if the higher rates stick over the weekend. If competitors balk, prices can be rolled back by Monday morning.

In addition, airlines don't manage their inventory as actively on weekends, so if cheap seats sell on some flights, prices automatically jump higher. Fare analysts may decide later to offer more seats at cheaper prices, but not until they come back to work on Monday, according to airline pricing executives.

So a ticket can be $199 certain days and $499 other days even months ahead of a flight. "There's a lot of method behind the madness, a lot of rationality behind the moves for airlines," said Ike Anand, Expedia's director of airline strategy. "But for consumers, it does seem crazy."

Rick Seaney, chief executive of FareCompare.com, studied three years worth of airline prices and concluded that 3 p.m. Eastern time Tuesday was the best time to buy. "That's when the maximum number of cheapest seats are in the marketplace," he said.

A daily check of fares in 10 different markets for the past two weeks showed that the average of the lowest prices offered in those markets was often mid-week, while weekends were higher priced. In the days studied, there were no "mistake fares" at ridiculously low prices that could skew results.

On Tuesday, Jan. 11, the average of the cheapest price in the 10 markets sampled on Kayak.com was $324, but the following Saturday it was $332. By Tuesday, Jan. 18, prices for the same dates in the same markets averaged $320, but the average hit $339 the following Saturday and $347 on Sunday.

To be sure, prices in many markets don't follow the pattern and can bounce wildly. But many do seem to chart a weekly cycle.

Last Sunday, for example, the lowest fare offered on Kayak.com, which searches airline websites, was $418 for a Miami-New York, round-trip leaving April 8 and returning April 15. On Tuesday, the same trip on the same dates was offered at only $323. A round-trip between Phoenix and Raleigh-Durham, N.C., was $429 on Sunday and $390 on Tuesday.

Airlines say weekends are their slowest bookings days, and ticket-sellers say they are the most expensive. Orbitz.com said its average ticket sold on Saturday was $791 last year, based on all domestic and international air tickets it sold. That was 7% higher than Friday's average price.

Expedia, Travelocity and Orbitz, the three big online ticket-sellers, all say their busiest day for bookings is Tuesday and the slowest day is Saturday. Expedia says Saturdays have about half the volume of Tuesdays.

Airline pricing took on its weekly cadence many years ago, when sales were announced in daily newspaper ads and most travelers bought tickets when travel agencies were open for business Monday-Friday. On Monday, pricing executives looked at inventory and booking trends and decided whether to offer a sale, putting together big newspaper ads for Tuesday editions. Airlines wanted sales out early in the week to generate buzz while customers could buy from travel agencies. Sales launched on Friday may not get noticed.

These days, the Internet makes ticket-buying available any time, and announcements of sales can be zapped to potential buyers electronically. Nonetheless, the pattern still remains in place.

But the dynamic may change. Some airlines say that social-media outlets, such as Twitter and Facebook, are beginning to disrupt the cycle. Some airlines are sending sales out directly to customers at all hours, making pricing far less predictable each day. Or carriers may tweet an hour-long sale. As a result, airlines can match competitors more nimbly, sneak sales under the radar of competitors and send deeply discounted offers anytime to customers who sign up for fare alerts.

So far, social-media sales still account for a small number of seats actually sold, but give it time.

"The tools we have make it a lot more dynamic," said Brad Hawkins, a spokesman for Southwest Airlines.

Write to Scott McCartney at middleseat@wsj.com
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