Factors Influencing Airfare
- The cost of flying is steadily increasing.airplane image by Clarence Alford from Fotolia.com
The price of airline tickets fluctuates year-round. The level of competition at certain airports affects the cost of individual tickets as airlines attempt to garner the most passengers. Projected passenger levels, timing of selected flights and the cost of fuel also each play a role in determining ticket prices. - The location of airports has a lot to do with competitive pricing. The arrival of low-cost airlines like Southwest and JetBlue has forced major carriers to lower their ticket prices in order to maintain market share. When flying to popular destinations that are served by several carriers, airlines will compete with each other, leading to reduced ticket prices. Conversely, at outlying airports that handle traffic for fewer carriers, ticket prices are often higher due to lack of competition. Competition-influenced ticket pricing doesn't guarantee that ticket prices stay down. As operating costs force the budget airlines to raise their ticket prices, major carriers like Delta use the opportunity to raise their prices as well.
- The time of day you fly plays a big factor in determining the price of your ticket. When establishing ticket prices, airlines often use the projected number of passengers a flight will have. Tickets bought close to the departure date are priced often priced higher as because of supply and demand dynamics. When the supply of seats declines, the price goes up. Seat location can affect airfare. Airlines that offer early seat selection often base those prices on the amount of legroom the seat offers. Seats located at emergency exits or where there's a dividing wall are often priced higher because they offer more room between rows.
- The cost of fuel is the second-highest expense (Labor costs are No. 1.) that an airline faces. As fuel prices rise, so does the cost of running an airline. In 2007, Southwest Airlines spent $2.5 billion on fuel, accounting for 28 percent of the company's expenses. To offset the cost of fuel, some airlines have begun flying at slower speeds to decrease fuel consumption.
