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The reason airline tickets are so expensive (and how you can still get a deal)
I spoke to the people at Singapore Airlines a few month ago. Everybody is always looking for the lowest fare, and while there are ways to get lower fares, the era of low fares is over. Given that tickets are expensive, I'd like to take some my own moment to tell you why your airfare is so damn expensive and give you a few tips to make it cheap.
What made the price go up? Today, tickets are expensive for various different reason. Fewer competitors means less need for lower pricing. There are only four large US carriers thanks to collapses and merger (soon three if the US joins US Airways). KLM and Air France are now one in Europe and Lufthansa has stakes in many smaller carriers.
While low -cost carriers keep European rates low, these 10 Euro rates vanish as soon as you depart the European Union! There is little encouragement or need to establish low tariffs to attract your company because carriers have entered into partnerships, mergers or bankruptcies. Secondly, the price of aviation fuels has risen enormously.
Already in 1996 aviation fuels were costing 55 cent per gal. Air carriers cannot fully compensate for this rise and therefore transfer part of it to the consumers, resulting in higher tariffs. In addition, air carrier tax and safety charges have also risen, resulting in an overall rise in the basic tariff. Currently, the following charges are being added to the costs of your ticket:
One half of the price of the ticket is the fee and tax! In addition, after 11 September and the downturn, air travel companies saw a decline in traffic levels, and to offset this, they cut both the number of services on offer and the frequencies of their services. You did this to conserve cash and flying fully-fledged aircraft. More full aircraft mean more passengers and lower cost for the carrier.
It' s the reason why, if you are living far away from a big town, you have seen how tariffs rise and the number of departures decreases. Aircraft are now flying almost full and carriers are very satisfied with it. What are the price fluctuations? There are many causes for rising and falling costs. Nobody can really forecast when or whether a price will rise or fall.
That'?s all the carrier knows. However, there are four things that influence prices: competitiveness, choice, demand und the price of crude oils. First and last articles are the ones that really influence price the most. These four things influence a beautiful thing named The Load Factory. Carriers want to fill their aircraft and maximise profit.
You do this by computing the stress coefficient of an aircraft. Carriers have a tendency to control their seat occupancy rate by continually adjusting the price of tickets to fill the aircraft and maximize revenues. According to Rick Seaney, a US inland ticketing can have 10-15 different price points on a single plane. When capacity utilisation is low and traffic is low, an air carrier increases the attractiveness of low fare services.
When capacity utilisation is high and market demands are high, the carrier increases fares. There are two kinds of passenger in the aviation industry: corporate and recreational. Travellers are price sensitive (the chief pays), but not at appointments. Recreational travellers are not flexibility in price (the less expensive the better), but in time.
Air carriers are continually trying to achieve a good equilibrium between these two species so that they can make a living. What's the point of flying a plane full of low rates when you can get guys to do more? Airline companies know that a certain number of persons will make reservations well in advance if they can find a reasonable price.
Carriers also know that they need a certain number of last minute seating for corporate travellers who make last-minute bookings and more. Ticketing costs are rising and falling due to the need for seating in an aircraft of these two passenger categories. Where can you get low rates?
My memory goes back to the day when I was enthusiastic about a $500 return journey to Europe. I am now, with typical airfares around $1,000, thrilled with a return price of $750. It'?s not unbearable to find a cheap one. Damn, you can sometimes go to Asia for the price of going to London!
Flexibility is a ploy not to be the one who has bought the most for your tickets. Like I said, airline companies are always altering fares and trying to bring recreational and professional travellers into equilibrium. Airline companies continually manage fares and try to prevent clients from paying the cheapest price point.
"Approximately three month earlier, carriers are beginning to administer these rock-bottom prices," says Rick. This means that carriers are starting to look at historic demographics and recent seating deals to see if they will publish these really cheap rates or keep them high. Rick told me most of the tickets will be available within 30 workingdays of departure.
That'?s where the airline knows they have you. If your appointments are no longer agile and you are paying whatever they require. And while there are many other ways to cut the costs of your tickets, the two most important are flight control and flight control when traffic is low. Gone are the times of low fares.
You do not come back and the fares you see now are the new standard for air tickets. You' ll just pay a great deal more, especially if you can't find the Sweet Spot when pricing is low. However, by learning how tickets are calculated, you can prevent being the paying one.
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