I remember sitting one of my Economics tutorials, battling to keep my eyelids open as the TA attempted to explain the concept of elasticity.
“Airline tickets are a good example,” he said. “The later you buy your ticket, the more expensive it is, because people get more desperate.” As a person who makes a buck on the side by helping clients with their travel planning, this analogy hit close to home. This myth seems to be shared by many who think booking early is the key to getting a good deal.
So, is it true that the earlier you buy your air tickets, the cheaper it is? Well, yes and no. While it is true that if you head to YVR and buy a ticket for the next flight out to Montreal you’re almost certainly going to be paying through your nose. The idea seems simple: if someone is desperate to be somewhere, that person’s willingness to pay — economists call this “elasticity” — goes through the roof. But the reverse doesn’t necessarily hold true, and this is when things get tricky.
When airlines first open reservations for flights — typically about 11 months out — they tend not to offer their cheapest fares for sale. One reason is that they simply don’t have a clear idea of how well the flight will sell. This means they wait a couple of months before making predictions on how many seats are going to be unsold, thus affecting their willingness to have promotions. These promotions target people who don’t have a firm travel plans. They might consider a different date, destination or airline, or they might not go at all.
On the other hand, many people who book their tickets more than half a year ahead might do so because they absolutely need to be somewhere, on that particular day. They can’t risk not getting a seat on that flight.
Let’s take Vancouver to Toronto on WestJet as an example. If we look at dates early in the summer, most days between May and June hover between $290 to $320. Strangely, that’s cheaper than travelling in the fall. Barring Thanksgiving and Remembrance Day, this is a relatively quiet period for air travel in Canada. Yet, prices in October and November are much higher than they are in May and June, ranging between $360 and $430.
Airfare pricing is unbelievably complex, as airlines use algorithms that predict the elasticity of their customers to maximize their revenue. What’s clear, however, is the fact that booking early does little to guarantee you a lower price. My advice would be monitor the date you’re eyeing. If you notice a higher price on your targeted date relative to the surrounding dates, that’s a sign to pull the trigger sooner than later as it’s very unlikely to come down.
Summer might be drawing closer, but it’s not the end of the world if you haven’t booked your tickets. With a bit of patience, flexibility and luck, you might just be able to outsmart those complex pricing algorithms.
So, UBC, looking to book a last minute trip for reading week or secure a ticket home for the summer? Be sure to keep your eye out for more travel tips coming your way!