Here's how airlines set ticket prices — and how to find cheap flights
Looking for a cheap flight? There's more you can do to save money on airfare than simply searching online and hoping for the best. It also helps to understand how airlines set ticket prices, which will help you determine when and where to look for bargains.
"Airlines aren't in the business of filling seats — they're in the business of making money and getting as much as possible for the entire flight," said Scott Keyes, founder and CEO of Going, a site that helps consumers find travel deals.
What that means in practice is that airline ticket prices change dramatically from the time they're initially set to when the flight departs, so it's important to plan ahead.
"Airfares can change 10 times a day and a lot more over the course of planning a trip," Hayley Berg, lead economist at travel app Hopper, told CBS MoneyWatch. "What drives changes in those prices is how many seats have been booked on a flight and how many seats had been booked in the previous year and what prices were."
Business vs. leisure travelers
Because business travelers tend to have less flexibility than leisure travelers, airlines try to price routes that cater to the work crowd — think last-minute trips to commerce-oriented cities — at higher rates.
"Nonstop flights booked last-minute to business-type places like New York, Los Angeles, San Francisco, tend to be priced more expensively," Keyes said.
Leisure travelers typically book trips more in advance and look for savings. Airlines know such customers are more price-sensitive because they're spending their own money rather than flying on the corporate dime.
"So a flight to Hawaii that's six months out with a connection — that will be booked by a leisure traveler with a lower willingness to pay — will be cheaper than it will be six days out," Keyes explained.
That's why it's typically better to book trips months in advance, when airlines know people shopping for fares are leisure travelers, versus only days in advance, when they'll typically jack up prices.
When to look and when to book
Timing is everything, according to travel experts.
"The biggest thing you can do to get cheap flights is to get the timing of your booking right," Keyes said.
That's especially true when you have little or no flexibility around when and where you're traveling. To score the best prices, start looking for tickets on domestic flights one to three months out and two to eight months ahead of international flights. Keyes refers to these prime booking periods as "Goldilocks windows," meaning when the odds of cheap flights popping up are highest.
When booking travel around holidays or other busy times of year, that window can expand even further.
"So think of it as a window, rather than a specific time, and your odds will be very good during that time period, versus before or after," Keyes said.
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Flexibility is important
If for some reason you miss the sweet spot for booking flights, use any flexibility you have to your advantage — the day of the week you choose to depart can be as important as where you're headed.
If you fly on a Tuesday or Wednesday instead of a Thursday of Friday, you can save roughly $90 on average on a domestic flight and $130 to $140 per ticket on an international flight, according to Berg.
"Those savings come just by flying on off-peak days," she said.
Flip the booking process
If possible, being flexible about your destination is also helpful.
"Traditionally, consumers decide where they want to go and when, then look at what flights cost," Keyes said. "By setting prices as the last priority, it's not terribly surprising we end up with pretty expensive flights."
To save money, flip that process on its head. First, look at the cheap flights out of your home airport. Of those destinations, decide which is the most interesting. Then choose dates that work for your schedule.
"By setting prices as the top priority, you end up being able to get cheap flights and can take three or four vacations for the same price you used to pay for one," Keyes said.