In an admirable effort to make the world of air travel more transparent, our friends at Skyscanner have lifted the curtain to give us a special look at the science behind flight pricing and even clear up common misconceptions.
“Flight pricing essentially comes down to a process known as ‘yield management’. While it sounds complicated, it is simply a strategy based on understanding and anticipating consumer demand,” Alex Astafiev, Travel Industry Expert at Skyscanner, explains.
Take a closer look at these key factors below that go into the algorithm and strategy of pricing.
Supply and demand
A common myth is that hitting refresh the page on a particular flight will drive up the price. Not true! Prices are affected by sales numbers, not search numbers.
Airlines know which seats sell best at particular times of year (school holidays is always a busy time, for example) and they know the more challenging periods to sell tickets, so they will adjust their buckets, or price levels, accordingly.
Consider how airlines control ticket prices
Pricing allocations can change depending on whether tickets are sold at the level the airline initially predicted. For example, if an airline thought a particular flight in March would sell well but actually sells poorly, the airline may increase the allocation of tickets in a lower priced bucket, which leads to an allocation of tickets at a great value for travellers!
Later is not always better
Airline pricing strategies typically protect some seats for ‘late availability’ bookings. This caters to last-minute business travellers who need to be at a certain place at a certain time and are likely to pay a premium to do so.
As a result, the closer to a departure date, the more likely it is that ticket prices will increase. This might not always be the case, but buying early may hedge your bets.
When planning your holiday, don't forget to pack your travel insurance.