Wednesday, October 04, 2017

All about airline pricing

Flying in India has become more affordable these days and this affordability will continue to drive demand. Even as more people choose to travel by air, airline pricing continues to confound them. So, passengers must be aware of when to buy, what they buy and how to handle any changes to take the surprise out of pricing. Airline pricing, driven by dynamic market forces, is highly sophisticated and focused on profit generation.

Here are few things to keep in mind to make better choices while booking tickets:

When to book

Airlines seek to fill the plane as quickly as possible hence passengers are advised to buy as early as possible to get the cheapest tickets.

Airlines sell their seats in buckets and open their bookings many months in advance. As the lowest buckets with the cheapest tickets are sold out, airlines move the ticket pricing up to the next bucket. Airline capacity is more or less fixed for six months at a time. A demand surge will make an air ticket more expensive.
Flying more cost-effective

The pricing process — called yield management — seeks to maximise the revenues per passenger kilometre (RPKM). Many other industries, which include hotels, taxi companies and even the Indian Railways, now follow this type of yield management.

In 2016, the RPKM touched around Rs 4, so, to fly 1km, a passenger is paying about as much as she would pay for a bus or train ticket. With the demand for aviation rising, the cost of flying is hitting parity with bus or train travel.
03/10/17 Economic Times

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