By Joe Brancatelli

From January  2000

Selling Out

Theresa Bova was feeling virtuous. It was only mid-August, but she and her husband had already planned their annual winter trip to Florida.

The condo was pre-paid for January through March, 2000. On December 27, an auto-transport company would pick up their car in New York, truck it to West Palm Beach airport, and have it waiting for Bova and her husband when they landed on January 6.

All that was left to do was buy the airline tickets. Bova didn’t expect a problem; several of her friends booked a week earlier and had paid $249 a person roundtrip.

But when Bova called her travel agent, she was shocked to learn that the lowest price for a roundtrip flight to West Palm Beach was $820 a person.

"I’m sorry," explained the agent, "but the $249 seats are sold out. So are all the other discount fares. Would you like me to try another date? Could you leave a few days earlier or later?"

"No, no," said Bova, "it has to be January 6. What am I going to do?"

"Call me tomorrow and we’ll try again," said the agent.

Bova didn’t understand, but she called again the next day. The $249 seats were still sold out, her travel agent said, but now the computer showed seats to West Palm Beach on January 6 were available for $200.83 a person roundtrip.

Bova was confused. "I thought you told me yesterday that all the cheap seats were sold out."

"Yesterday they were. Today they’re not," replied the agent. "That’s how it works sometimes."

The tale of Theresa Bova and the "sold out" discount tickets to Florida is not a bizarre sideshow in the increasingly convoluted game of airline fares. Similar economic passion plays are performed thousands of times a day, every day, around the country. Flights that are purportedly "sold out" one day are suddenly available just days, and sometimes only hours, later.

There is a simple explanation for these peculiar occurrences.

"Sold out" doesn’t mean what you think it does. In point of actual, physical fact, airlines are rarely "sold out." On an average day in America, three of every ten seats the airlines fly are empty.

So what do they really mean when they say "sold out?"

"Embarrassing as it sounds, ‘sold out’ usually means our computers have decided it won’t sell you a seat at the price you want pay at the exact instant you’re trying to buy one," explains the pricing chief of a major U.S. airline. "The computer can change its ‘mind’ five second later, or five hours later, or five days later. No human being—including me and the president of the airline—knows exactly what the computer is charging at any particular moment in time."

If you are concerned because your flight plans and your travel budget are at the mercy of a computer, you’ll be frightened by the fickle nature of the digital demons. One widely accepted estimate suggests that airline computers change prices a million times during the course of a typical day.

"I know people pay $200 when they were expecting to pay $500. I know some people end up paying $500 when they might have paid only $200," admits the airline pricing chief. "But, by and large, when you consider half a billion people fly every year, the system works. The computers do a decent job of selling travelers tickets at prices they are willing to pay."

That last point is the crux of the matter. The travel industry’s "yield-management systems"—that’s what experts call the pricing computers—are programmed to estimate how much each individual traveler is willing to pay for an airline seat. The machines are told to squeeze every last penny from every last traveler and ensure that each customer pays every dime they are prepared to pay.

Relying on a series of complicated projections and historical models, the computers constantly recalculate prices and allocate the inventory available at each price. The computer changes its assumptions from minute to minute, shuffling the numbers, reassessing its inventory and changing the ratio of seats it will sell at the current prices.

If this system sounds like nothing more than a computerized flea market, you’re right. Travelers and airline computers are essentially locked in an elaborate bargaining ritual. But instead of batting offers back and forth in the time-honored method of the souk, the computer sets a price, sells you something if you’re willing to pay, and claims things are "sold out" if you’re not.

If you’ve guessed wrong, you’ll probably come back tomorrow and pay what the computer demands. If the computer guessed wrong—as it did in the case of Theresa Bova—you can come back the next day and find that the computer has lowered the price to a level you’re willing to pay.

Of course, it’s no easy task to outguess the airline computers. For every Theresa Bova who got her discount fare by calling back another day, there are dozens of customers who pay much more than they should have paid. But there are some tactics to increase your odds of beating the airline pricing computers at their own game.

For starters, be flexible. The price of an airline seat can vary by hundreds of dollars based on the time you fly and the day you travel. If you goal is finding the absolutely cheapest seat you can buy, ask your travel agent or the airline reservations clerk to check for other times or other flights. Generally speaking, however, the least expensive fares are most plentiful for flights departing after noon on Tuesdays through Wednesday evenings, and on Saturdays. Cheap seats tend to be scarce on Fridays, Sunday nights and Monday mornings, the times preferred by business travelers who must fly.

You’ll also do best if you know the rules of the fare game. Booking early is usually the best strategy, since airlines generally make the cheapest seats available from 21 to 30 days before departure. Prices rise when you buy within 14 days of departure and continue to increase as you approach seven days, then three days, before flight time. Within 24 hours of departure, there are almost never cheap fares available because the pricing computers assume only business people who must fly are buying seats on such short notice. The least-expensive fares are almost always nonrefundable, require you pay within 24 hours of making a reservation, and mandate you stay over on a Saturday night.

Persistence also pays off. If a fare you covet is "sold out" when you first call, try again several hours or several days later. Remember that "sold out" isn’t a statement of the physical realities, but rather a computerized negotiating tactic. And never assume the price you’ve been quoted or the price you see in the airlines’ newspaper ads is actually the lowest fare available. Never book a flight until you’ve asked the obvious question—"Is this the lowest price you have?"—at least once.

Lastly, be reasonable. Remember the value of your time. It’s almost always possible to shave $10 or $20 off the cost of an airline ticket. But if that savings comes only after three or four hours of calling and negotiating, have you really saved anything? Sometimes the best strategy when bargaining for an airfare is to pre-determine the price you’re willing to pay for a seat. If you get the price you want, book the seat and forget about whether it is the "lowest" fare.


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