Friday, January 23, 2009

Airline Pricing Strategy

Of course everyone knows how crazy airline pricing is. I sometimes wonder if any two people on the same flight paid the same price. Just imagine any other business, an appliance store, for example, who followed the same model. Jeez, that refrigerator was only $350 dollars yesterday and it is $500 today. Should I buy now or wait to see if the price drops tomorrow.

I am flying to Puerto Vallarta, Mexico at the end of the month. I purchased my ticket on November 13, 2008 at which time the price was $681. On December 25, 2008 the price had dropped to $612,.53 where it stayed until January 6, 2009 when it jumped to $664.22. On January 9, 2009 it dropped to $630.64 where it stayed for one day before soaring to $809.64 where it also stayed for just one day.

On January 11, 2009 it dropped to $689.64 and stabilized for, hold your breath, three whole days before jumping to $809.64 for one day and then dropping back to $689.64 for four days.

On January 19, 2009 the prices jumped to $899.64 and stayed there for three days. On January 22, 2009 it dropped back down to &689.64 and now, today, January 23, 2009 it has fallen to $654.64.

Kind of makes your head spin, doesn't it. And the price differential would have to be at least $150.00 from what you paid for your ticket to make it worth your while to switch to a lower fare, because that is what they will charge you to do it. So, if you had paid the $899.64 for your ticket a few days ago you could pay the $150.00 to trade it in for the $654.64 ticket being sold today and save yourself over a hundred bucks.

Now, and correct me if I am wrong, wouldn't you think the airlines would want you to purchase your tickets early? They have the cash in hand and can would be better able to determine capacity requirements. But with their pricing strategy, what is the motiviation for doing so. It is like playing roulette, trying to figure out if you got the best fare or if it will drop again or if you will get screwed if you wait because it will go up.

Just another reason people love to fly.

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