Airfare 201: Oh, the Games Airlines Play!

My earlier Airfare 101 column covered questions about planning a trip for minimum cost—the “where” and “when” of scheduling a trip. Airfare 201 gets to the meatier questions of how the airlines play their fare games, and how you can game the system.

Outlook Is for up

Just about everyone in the business believes that airfares are going up, generally, across the boards, and more or less permanently. The giant “legacy” lines appear to be learning to restrain the number of seats the offer. All the airlines, including low-fare lines, face cost pressures: Airline labor, which was unmercifully squeezed on pay and benefits during the lean years, is going to demand their “fare share” of the current prosperity.{{{SmarterBuddy|align=left}}}There’s nothing much you can do to game this trend. But you can profit by gaming the system airlines use to set fares.

Long-Term Fare Postings

Airlines usually post fares up to 11 months in advance. But those far-future fares are almost always the top of what the airlines expect to be charging. Most observers say that airlines don’t post the more realistic lower promotional and other reduced fares until four to five months prior to departure.

You can game this factor by waiting until four-five months before you plan to travel. Look ahead further than that to get an overview of the fare and schedule scene. But don’t consider buying seriously until the deals start to arrive.

The Best Deals Are Sale Deals

The best airfare deals are almost always available only through short-term “sales.” Typically, those deals cover travel for only two or three months in advance, and the purchase “windows” when you can buy seats at sale fares are getting shorter all the time. As I’m writing this, three big lines are promoting deals to Europe, with buy windows as short as one week. Last week, I got a notice about some really good fares available to buy for just 24 hours.

The only way to game this part of the system is to make sure you learn about any sales that might be of interest no matter show short the window. By far your best bet is to sign up for as many email bulletins and news services as you can handle. Start with the airfare newsletters here at SmarterTravel, but also sign up for the various notification services operated by the big online agencies and the individual airlines you use.

But Sale Deals Are Limited

Airlines limit the number of seats they sell at their lowest sale fares, and when those seats are sold, you have to pay more. Whenever they offer good fares, airlines have to allocate something like 10 percent of their total seats to those fares: U.S. government rules protect you against possible “bait and switch” tactics. But those lowest-fare seats are not available on every flight on any given route; they’re allocated around the schedule to minimize loss of more expensive seat sales, and they can sell out quickly

That means you may have to adjust your itinerary a bit to get the bottom price. I just looked at a conventional transcontinental trip on a leading low-fare line, for example, and found—even a month in advance—that the cheapest ticket, at $139 one-way, was available on only one day that week and on only one flight that day. If that flight doesn’t work for you, you pay more.

Competition Lowers Fares; Convenience Increases Them

Talk about economics 101: Airlines set fares more to market conditions than to costs. By now, the “Southwest effect” is a permanent part of industry lore. Whenever a low-fare airline operates on a route, all the airlines set their fares at comparably low levels. Conversely, on fares on noncompetitive routes are almost always high.

Similarly, fares to/from more popular airports are often higher than fares to/from airports with less convenient locations. Over the years, for example, flights to/from Oakland have almost always been a bit cheaper than flights on the same routes to/from San Francisco International. You find such multiple options in other major metro areas, including Boston-Manchester-Providence, JFK-LaGuardia-Newark, Baltimore-National-Dulles, O’Hare-Midway-Gary-Rockford, and Los Angeles-Burbank-Long Beach-Ontario-Orange County.

The gaming strategy is obvious: Look at fare options to/from for all the feasible airports for both your origin and destination and figure your best.

Hubbing: Costs Airlines More, Costs You Less

More pricing to market: You often find fares lower on flights that connect through an airline’s hub than fares on nonstop flights, even on routes where the airline flies nonstop—this despite the fact that flying you nonstop costs the airline a lot less than flying you on two connecting flights. You see this in both domestic and international markets. Transatlantic lines are fond of charging less to fly you on connecting flights to from North America to one of their competitor’s hubs than to fly you nonstop to their own hub.

You can’t really game this system; it’s a tradeoff decision. Is the price difference enough to offset the added hassle, extra time, and higher missed connection and delay risks of connecting flights? That’s something you have to decide for yourself each time.

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Hub Flights: Costs Airline Less, Cost You More

The flip side of the cheap-hub-connection factor is that, where they can, legacy airlines charge more to/from their “fortress” hubs than they do for connecting flights to/from two different “spokes” even when those flights connect at the hub.

You can game this element of the system two ways. First, you can sometimes find a competitive airport within feasible driving distance of the fortress hub. Until AirTran lowered competitive fares there, for example, lots of folks from Atlanta routinely drove (or took a special nonstop bus) to Birmingham to catch a Southwest flight.

You can also play the “hidden city” game: Book a cheap connecting flight to some more remote destination through the hub then just don’t take the connection. This ploy violates airline rules, but it isn’t easy to police. Obviously, however, you can’t check any baggage, and you can’t do it on a round-trip flight.

Buy Two Get One

Although most low-fare airlines sell their lowest-fare tickets one-way, absent low-fare competition, legacy lines often still price their cheapest tickets as round-trip only, with minimum stay and advance-purchase restrictions. In those cases, one-way tickets can cost more than double the cheap round-trip.

The obvious remedy here is buy a round-trip and just don’t show up for the return flight. This, too, violates airline rules, but it’s almost impossible to police and, as far as I can tell, totally unenforced.

The “Me, Too” Strategy

For many big airlines, the number one long-term strategy is “me, too.” Whenever any line kicks off a sale, its competitors almost always match. A few years back, the matches were often identical. Lately, however, they seem to be a bit more selective. As noted above, a current transatlantic sale shows different purchase windows and some fare differentials.

The gaming strategy is obvious: Whenever you spot a sale on one line, check competitors for a better schedule, better availability, and occasionally a better price.

Time Your Buy

Airlines like to play cat-and-mouse games with each other in announcing sales. The typical officially starts not with a press release but instead with the “dumping” of a set of new fares into the computerized fare data base. These dumps are often during the early morning hours, and they’re sometimes timed to catch competitors off guard and gain a few days or even hours of exclusive low pricing.

The gaming strategy is to get first crack at what might be a small number of really good deals. Some mavens say you should start looking Tuesday at 3:00 p.m. Eastern time; some say Wednesday midnight; some say Sunday.

No Magic Rule

In the final analysis, you can’t totally game the fare system. The top mavens all caution you that nobody can really predict the absolutely best time to buy a ticket. Even in the middle of a sale, nobody knows whether next month’s sale prices will be higher or lower. At some level, it’s always a crapshoot.

Here, your strategy is probably “the perfect is the enemy of the good.” When you see what looks like a good deal, grab it, and don’t work if, next week, the price goes down a little.

Your Turn

How do you determine when to book or when to wait? Share your best tips for booking airfares by submitting a comment below!