Cracking the Airline's Code

The math behind budget travel

Independent learning week: the time of the year when St Andrews suddenly becomes deserted and every student turns into the Indiana Jones of budget flight tickets. How many times, however, have you found an affordable flight one day and then realised with horror that the price had doubled by the time you looked it up again a few days later?

How can prices vary so drastically in such a short period? 

The reason for this can be traced back to the 1970s — American Airlines was looking for a way to increase revenue and popularise air travel to avoid half-empty planes. The solution, pioneered by the future CEO of the company, Robert Crandall, was what we now call ‘dynamic pricing’.

The idea behind it was simple: ticket prices should not be fixed but instead should change based on various factors, such as date, seasonality, and popularity. 50 years later, airlines still update their prices following the same principles.

The key concept of this strategy is price buckets, in which seats are grouped based on cost. When demand for a specific fare is high, the computer automatically raises it to a higher bucket and vice versa. This way, prices are quickly and easily adjusted. 

However, direct demand is not the only factor taken into account. The date and time of the flight also play a pivotal role. For example, weekend flights are always placed in higher buckets, as there is a higher demand for them. The same happens with popular vacation destinations during holidays, though these get downgraded to lower buckets during the off-season. 

Furthermore, booking flights early in the morning or late at night can help avoid peak commuting hours and expensive fares.

To take into account all these different scenarios, airlines nowadays average between 20 to over 70 different buckets. The new millennium has also provided airlines with a new tool: internet traffic can now be monitored to better estimate demand. Such a procedure has yet to be confirmed, but research on whether repeatedly visiting the same flight page leads to an increase in its price is being conducted.

This logical process helps companies maximise revenues, but it can also be reversed and exploited to find flights at their cheapest.

Most often, late Tuesday or early Wednesday (in the airline’s time zone) is the best time to book. This is because new fares are usually released on Mondays, but people do not tend to buy early in the week. Subsequently reacting to the low demand, prices are lowered for the next few days before being raised again as the weekend approaches. 

Furthermore, prices tend to be higher in the first half of the month, as people receive their salary then and thus have more money to spend.

Group bookings should also be avoided. In cases where low-fare tickets are available but are not enough for all the group members, websites will only show the more expensive bucket where enough seats are available on the same flight. 

In addition, as a flight gets closer to the date, tickets are automatically moved into higher buckets. This upgrade happens for the first time three weeks before departure and repeats itself again after two weeks and one week before. Consequently, it is better to buy tickets at least four weeks in advance.

In conclusion, if you are considering flying abroad next reading week, pay attention to when you book your flight. Earlier usually means better, but keep an eye on the day and week as well; low demand could offer pleasant surprises. Dynamic pricing can be a pain, but if tackled well, it could also be the key to your next dream holiday.

Illustration by Sandra Palazuelos Garcia