For best air fares, learn the yield management game

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Published: August 14,2014

Tags: air fares, airport, Business, Mississippi

Glenn McGehee

Glenn McGehee

The Wall Street Journal in a 2011 article likened the pricing of airline tickets to a rug bazaar where the airlines try to get as much as they can out of each passenger.

But the passenger can bring some savvy to the bargaining as well, says Glenn McGehee, who learned the airline ticket buying trade from running McGehee Cruise & Vacation Inc. at Jackson’s Highland Village for 39 years.

To know the tendencies of the airline with which you are bargaining, think “yield management,” McGehee says.

“Airlines do raise and lower fares, but what they are tremendous at is yield management.”

» READ MORE: Jackson air fares among most expensive in the nation

» READ MORE: What you and the airlines pay

This essentially means they put more of the low fares on off-peak flights and on flights that aren’t close in to the airport from which you are departing, he explains.

As an example, you could get a $294.60 American Airlines roundtrip flight that would leave Jackson for Los Angeles on Aug. 11. But chose, for instance, the 1 a.m. redeye back to Jackson on Aug. 14 and you’ll pay $1,050 – unless you played the yield management game correctly by booking ahead at just the right time, either well in advance or close to departure when a seat could go unfilled.

And you would have also had to bring another trait to the game: flexibility. The right block is there only for someone who can be flexible on departure dates.

“Maybe you could get it down to the $400 or $500 range” for the return to Jackson, McGehee says.

United Airlines and Delta Airlines also have the base $294.60 Jackson-L.A. roundtrip. “If it’s available, they may only allow five or six seats at that fare on a given day.”

Get the wrong date and time and you could pay $800 or more, he adds.

Other than booking in advance, no “perfect” time exists for coming out a winner in yield management maneuvering, he adds. “It boils down to nobody knows.”

In their yield management, airlines will block off from, say, eight to 12 levels of discounts, according to McGehee. Your task is to catch the right block at the right time, he says. “One of the biggest variables is how many people are already booked.”

When one block is sold out, ticket sellers move to the next block and quote a higher price. So when the person sitting next to you on a flight pays substantially less for a ticket, attribute the difference to savvy yield management manipulation, or perhaps just good luck.

The blocking practice also explains why group travelers seldom gain bargain prices, McGehee says.

“When you have bigger groups it works against you, especially if you’ve got over 50 passengers.”

The best approach for getting better prices on group travel,is to spread the departures throughout the day, he advises.

Other factors beyond the air fare blocks make a difference as well, according to McGehee, who cited the transformation in the airline sector through mergers and bankruptcies and fluctuating fuel costs.

But the blocks are big, nonetheless. For instance, Delta Airlines’ base price from Jackson Medgar Wiley Evers International to Atlanta Hartsfield-Jackson International is $306.60. “This is not a date-specific” price and nor is it based on seat availability, McGehee says. “It could be $600 by the time someone bought it or it could be as low as $200 based on the seat vacancies at the time.”

McGehee says he is not fully convinced that the loss of Southwest Airlines could cause fares out of Jackson Evers to rise significantly above fares out of New Orleans, Birmingham or Memphis. “To some extent that has happened,” he says. “But that doesn’t mean Jackson is persona non grata. They can still be competitive.”

Back in 1997 when Southwest Airlines came to Jackson, the perception was Southwest would maintain plentiful cheap air fares. “What we found was that people were jumping in and booking Southwest and their fares went up.”

By contrast, the loss of bookings at Jackson Evers brought down Delta and American’s fares, he notes.

Now Delta, American, United and US Airways could see a similar loss of booking should travelers decide to drive to airports two or three hours away, McGehee says.

“More bookings from other airports could lower fares in Jackson.”

 

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2 Responses to “For best air fares, learn the yield management game”

  1. Jackson air fares among most expensive in the nation » Mississippi Business JournalMississippi Business Journal Says:

    […] » READ MORE: For best air fares, learn the yield management game […]

  2. What you and the airlines pay » Mississippi Business JournalMississippi Business Journal Says:

    […] » READ MORE: For best air fares, learn the yield management game […]

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