Airlines Reporting Corporation (ARC), a company that processes airline transactions for travel agents and consumers, has analyzed 144 million transactions for domestic flights in 2011 to better understand airlines’ pricing schemes. The study found the lowest fares were available six weeks in advance of the departure date.
I’ve always been under the impression that the earlier you can purchase tickets for a flight, the better, but buying far in advance does not seem to be the best option when looking at the data. The study makes the case for planning ahead, but not too far in advance. The data also show that waiting until your departure date is just three weeks away can be financially damaging. Prices incline steeply once your departure date is three weeks away. The fare paid according to the study features another, steeper increase seven days before travel date.
Customers who purchased their airline tickets six weeks in advance received an average discount of about 6 percent off the average fare paid for that flight.
Not everyone has the luxury of planning six weeks in advance for a trip. Businesses often need to respond to changing travel needs, and are more likely to pay higher prices for a flight than a family planning a vacation.
I purchased tickets to my most recent round-trip flight, traveling from the east coast to the west coast for Thanksgiving, only seven days in advance. The flight cost $419 including all taxes and fees. It wasn’t the most expensive fare I’ve paid for this type of trip, and there was at least one slightly less expensive option available if I were willing to fly at an inconvenient time.
I haven’t done a great job of planning in advance. It could pay off to know where I will want to go six weeks in the future. I’ll try to keep that in mind if I intend to travel this spring. How far in advance to you plan your travel?
ARC [pdf]
Update: Less than a day after a Verizon Wireless employee leaked a memo with this information, the company has announced that it will not be moving forward with the implementation of this $2 fee.
The sad fact is we now live in a world where many companies have left their customers behind in the search to squeeze every possible cent out of every transaction. I’ve long lamented the increasing incidental fees charged by airlines; you can’t eat, check a bag, or receive a seat assignment early without paying extra now, and soon you may not be able to sit or use the restroom in-flight without swiping a debit or credit card. Gas stations charge more for fuel if you want the convenience of using a credit card. Banks tested and for the most part ultimately backed away from monthly debit card fees.
Starting January 15, Verizon Wireless will charge its own customers $2 to pay their own mobile phone bills.
Only certain payment methods will be subject to this fee, but the new policy leaves only a few opportunities to avoid this surcharge:
- Enroll in auto-payment, so your bank account is debited or your credit card is charged the same day every month.
- Mail a paper check as if you’re still living in the twentieth century.
- Use your bank’s bill payment service.
- Walk into a Verizon Wireless store and pay a bill in person (an option for everyone, but a popular for those without bank accounts).
- Pay with a Verizon Wireless gift card.
If you use a credit or debit card to pay your bill via Verizon Wireless’s website or over the phone, the $2 fee will apply, but if you pay via check (electronic ACH or paper) via phone or online, there is no fee. It’s another case of payment type discrimination; it costs more to process credit and debit card transactions, and Verizon Wireless is passing that cost along to certain customers. The customers most affected are those who need to wait to the last minute to pay their bill — customers living paycheck-to-paycheck, many of whom don’t have bank accounts.
It doesn’t take much to avoid this fee, but it’s another hassle for many customers and an indication that the pattern of nickel-and-diming across a variety of industries will continue. And those most at risk are those who have the least power to do anything about it.
Photo: ColumbusCameraOp
If you follow credit card offers like I do, you might have noticed that this past year was particularly exciting. Credit card issuers have been heavily marketing products in search of customers, spending more advertising dollars per customer than they have in recent years, and increasing rewards for the best customers. For individuals who have mastered their own financial situation, this has paid off with cash back incentives and free flights through travel rewards, while customers who have just begun the path to getting out of debt could use 0% APR balance transfer offers to save money.
Not everyone benefits from the best credit cards, however. It’s easy to fall into issuers’ traps. Don’t try to beat the credit card issuers at their games unless you’re prepared to lose.
2012 will be an interesting year. It’s impossible to predict specifically what will happen within the credit card industry, but you can be sure the issuers will continue to compete aggressively for new business and offer the best deals to customers with the best credit. If trends continue, here are the offers I expect to be the best credit cards of 2012.
The best cash back credit card of 2012
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One of the two major airlines that had not yet filed for bankruptcy or restructuring, American Airlines, gave in and filed for Chapter 11 protection today. The airline will continue to operate its business as usual; if you planned to fly American Airlines, you’ll still be able to do so without any problem. In fact, you may even see lower fares and bonus miles offers while the airline looks to maintain customers through the restructuring.
Chapter 11 allows a company to borrow money on more favorable terms and to cancel contracts, and in a market where almost every other airline has benefited from Chapter 11, American Airlines was finding it difficult to compete without the same benefits. That’s not to say the airline isn’t in trouble. As of yesterday, the stock price was down 79.2% for the year, and as of the time I’m writing this, the price has plummeted to a point where it is down more than 97%. The New York Stock Exchange has suspended trading of AMR shares.
Filing for bankruptcy is a reversal of policy from American Airlines, whose spokespeople have long said the company is healthy despite financial losses and the expectation for that lack of performance to continue.
Now might be a great time to purchase American Airlines flights for after the holidays. Since bankruptcy protection is normal for airlines, with Southwest being the only major carrier left never to have filed, there’s no reason to believe American Airlines’ services will be going away anytime soon.
Photo: lrargerich
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