When to Buy Airline Tickets

I have worked on airline pricing software, and have seen the dirty bowels where your airfare is cooked up.

The truth is that pricing rules are so complicated that occasionally even the people who are supposedly in charge of these things are not entirely able to predict or explain the prices.

Airline cabins are broken up into a dozen or more "fare classes", with a set number of seats available in each class. As you move towards the back, things get cheaper. As fare classes sell out, the prices for all fare classes on the flight will be moved up.

Travel between a particular pair of airports does have a base underlying fare, but so many special rules apply based on day of week, length of stay, holidays, and more that prediction is a lost cause.

If the airline suspects you are a business traveler, you will be charged much more. Round trips within a business week are tip-offs. Saturday night stays mark you as a leisure traveler.

If you are traveling on routes that the airline is trying to promote, or on which they are competing on fares with another airline, you may pay less.

If you wait until the last minute to purchase, you will almost certainly pay much more -- unless the flight is nearly empty (and the airline can figure this out), in which case you will not.

If part of your journey connects you through another airline, special rates apply.

If you are military, special rates apply.

All of these rules and many more go into a soup and the "pricing engine" is supposed to sort it all out. Afterwards, there may be significant debugging as the engineers try to explain why some fares have been applied.

When a competing airline surprises everyone by having extra-low fares, a sudden panic may set in, and new, "high priority" rules may be put into place to override the pricing engine to be competitive. These new rules may or may not stick around forever, where they complicate future pricing puzzles.

Then, of course, the actual tickets are sold through various online intermediaries, where pricing enters a whole new realm of negotiation, bulk sales, markdown and markup.

Hey, it's better than the 60's, when all this stuff happened on paper, and it wasn't until an hour before departure that the airline even knew how many people would show up at the door of the plane.

Southwest was one of the first to bust through this morass. One of the many reasons that Southwest kicked everyone's ass was their ability to set prices simply and predictably, and the fact that all of their tickets are sold direct to the customer with no intermediaries.

Airlines use complex loading systems to maximize both capacity utilization and total revenue. So when a flight is far off, the fare is moderate (because they still have a long time left until the flight). If there's extra capacity on a flight, they'll start lower the price to use up capacity as its date approaches. When you're in the last week or two before the flight, the fare may go way up (because there are only a few seats left and they are looking to maximize their price) or go down (because they have a lot of seats left and they're looking to fill them.)

Generally, if an airline is doing things right then a lot of flights will be fairly full, so you'll most often see prices rising in the last week or two before the flight date.

(An additional factor is that if you're looking for a ticket next week, you probably have less date flexibility than someone booking a month in advance.)

(Conversely someone once told me that the actual marginal cost of an empty seat on a commercial flight is around $35. In theory, if a flight is about to leave the gate and a seat is empty, the airline should be willing to sell a ticket for any price over $35... )

There are some other factors as well, such as trying to segregate business travelers from vacation travelers. Business travelers tend to book last-minute, want refundable fare and don't want their trip to extend over a weekend day. Hence the spike on traveling from LAX to the east on Thursdays - many flights from LAX to JFK or MIA on a Friday won't arrive until late Friday night at best.

For a given number of seats available, you can plot a price (Y axis) -vs- time left (X axis) curve. This curve will gently slope down and hit 0 when t=0. Now you can plot a whole series of such curves, one for each N (where N = number of seats available). As N goes lower, the curves are higher.

If you're at a certain point in the curve for a particular N, if a seat gets sold, then you can jump up to the curve for N-1 . Obviously, the airlines' systems aren't fast enough to do this in realtime; so they do this adjustment in batches (every Monday and Wednesday?).

Anyways: this was what he claimed was going on. I'm not sure how correct the above is.

Southwest flights don’t show up in online airfare searches — just their own website.

That said, I'm not quite sure what he's trying to show. Is it what days are cheapest to travel on, or what days are cheapest to purchase the tickets?

And as has been noted, this approach is going to ignore Southwest and other airlines that don't show up on the aggregators, as the people doing this aren't going to go to every website.