Month: January 2017

Finding cheap last-minute airfare is rare, but that doesn’t mean you shouldn’t try

Finding cheap last-minute airfare is rare, but that doesn’t mean you shouldn’t try

In my last post, I mentioned a very cheap airfare I had found for $137 from San Jose to Boston that had allowed me to make a last-minute trip to San Francisco to see my girlfriend for New Year’s, using it as an example of cases where you may want to credit your fare to an airline other than the one you’re flying.

When talking about this with people, they were often very surprised. But in reality, I wasn’t too surprised that I was able to find such a cheap fare at the last minute.

In theory, one would think that airlines would apply heavy discounts to last-minute fares in order to maximize the chances of a full flight – e.g. if they have three seats left to fill, why not make them super cheap? In reality, this isn’t how it works though, as anyone who’s tried to book a last-minute flight likely knows. There are mostly two reasons:

First, if they did this, then everyone would just wait until the last minute to book their airfare, which would be a disaster for the airline in terms of a planning perspective.

But more importantly, the airlines want to make sure that there’s always a few seats left to allow for the chance of the traveler (usually a business traveler) who absolutely has to get somewhere at the last minute and will pay as much as s/he needs to (usually from a corporate account) to make that happen. In other words, an airline doesn’t want to be in the position of turning away a wealthy businessman who absolutely has to get from New York City to Los Angeles at the last minute and will pay $1,000 to do so because they already sold the last seat on that flight to some college kid for $100.

For example, right now, the cheapest ticket for two people traveling from New York City to Los Angeles today is a whopping $868, and it’s not even nonstop!nyc

Now, are all of these fares going to be purchased before the plane leaves? Highly unlikely (not to mention since all of these have connections, it’s likely that purchasing one of them could eliminate another).

But let’s say that flight gets filled by a last-minute captive traveler willing to pay anything one time out of every eight times. The airline then earns more money than if they had routinely discounted that fare to $100 and filled it each of those eight times.

Of course, the title of this post is not about why you shouldn’t look for last-minute fares, but rather why you should – after all, they definitely do exist, as evidenced by the fare I found. And given what I wrote above, it’s not surprising. Airlines tend to avoid having cheap last-minute fares because of the possibility of the captive business traveler, but there are certain times of the year (and routes) where it is very unlikely to have this kind of last-minute traveler. Saturdays would be one, as would the week between Christmas and New Year’s, which is virtually a dead week in the corporate world.

Another example would be Hawaii, which doesn’t tend to get much business traffic. That’s of course not to say you’ll find a cheap last-minute fare to Hawaii, just that it won’t be as much of a difference from a normal fare (which are already pricy).

Lastly, this practice of marking up last-minute fares is generally less common when it comes to ultra low-cost carriers, such as Spirit, Frontier, and Allegiant. Given that many business travelers would rather miss an important meeting than suffer six-hours cross-country on Spirit Airlines (even though I don’t think it’s that bad), these airlines are generally less concerned about preserving their ability to gouge last-minute business travelers. Furthermore, as their profit margins are far tighter, they generally are better at filling up all seats in advance (as you can see from the screenshot, none of them have any availability).

Looking at a last-minute flight from Boston to Washington tomorrow morning (a very popular business route), Spirit is almost $50 cheaper than the next cheapest airline, and is selling the flight at a price ($103) not too much more than a typical flight on that route not bought at the last-minute. Nearly every business traveler I know would be able to pay the extra $46 to not fly Spirit, but for someone else more budget-conscious who may need to take this route at the last minute due to personal reasons, they may opt for Spirit:

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On the other hand, if you look at this same route exactly three weeks later, the fare is not only cheaper, but other airlines are matching (or coming close to) Spirit:

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As a reminder, for finding cheap airfares, whether at the last-minute or far in advance, I can’t recommend my initial post highly enough.

If you have any questions or comments, please feel free to let me know!

 

Why I sometimes earn miles with airlines I’ll never fly

Why I sometimes earn miles with airlines I’ll never fly

At the time of writing this, I recently got off a flight from San Jose to Boston via Denver on United Airlines. I was lucky enough to score a great last minute deal, booking it for just $137, despite it being a nearly 3,000-mile journey.

Now, in a more simpler era, airlines had the very simple policy of giving you one mile earned for every mile you flew. Unfortunately, itineraries like the one I booked above meant that the airline would give away a lot of miles without earning much money. In contrast, (business) travelers who often booked very expensive short-distance (often last-minute) itineraries would not earn very many miles, creating a disincentive against a behavior that is very profitable for the airline.

Consequently, over the past three years, the Big Three airlines (United, Delta, and American) have all made the switch to what is known as revenue-based earning, where the number of award miles earned correlates with the amount of money spent on the ticket, rather than the amount of miles flown. Southwest, JetBlue, Virgin America, and Sun Country have always operated this way, leaving Alaska, Frontier, and Spirit as the only domestic airlines that still award miles based on distance flown rather than money spent (though there is rampant speculation that Alaska may be switching away from this, and redeeming miles and Frontier and Spirit is an exercise in frustration).

With the Big Three airlines, they now award you miles equal to five times the price of your airfare before taxes, assuming you don’t have any status. So for the itinerary I booked recently on United, despite flying 2,705 miles, I would have only earned 535 United award miles:

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Considering that domestic one-way awards on United start at 10,000 miles (for trips under 700 miles), this means that I won’t have enough award miles to redeem for a free trip until I’ve spent $2,000 on airfare!

If that sounds like a lot of money to spend in order to book a free flight that often prices for under $100, it is!

The good news is that given United’s membership in the Star Alliance, you can choose to earn miles with any of the 27 airlines in the Star Alliance, or one of their non-alliance partners like Aer Lingus.

And while the other airlines would love to also award miles based on how much you spent on United, for obvious reasons, they do not have that data, nor is United going to provide it to them. So they have no choice but to award miles based on how far you fly. That being said, not all tickets will earn miles at the same rate. And that’s not just whether you’re flying in first, business, or economy – even within economy, not all tickets earn at the same rate.

I’m not going to get into a detailed explanation of airline fare classes given how complex a topic is, but what it comes down to is that airlines sell there tickets in different fare “buckets”. Availability of those buckets varies depending on a number of factors, which is also why the person next do you on your flight may have paid a different amount for the same flight.

Somewhere on your ticket there should be a letter indicating the class; in my case it was “G”:

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Thanks to the very helpful website wheretocredit.com, I can now see how many miles I’ll earn on a G fare on United Airlines:capture

Knowing that my flight is 2,702 miles (which I can see from the “PQM” field above), I know that if I credit to Singapore Airlines, I can earn 100% of those miles flown, or 2,702 miles with Singapore Airlines’ KrisFlyer program. As you can see from the chart, my flight will earn the most miles on Singapore Airlines (as it turns out, almost all United flights will earn 100% on Singapore Airlines).

Of course, that’s not to say you should always credit miles to the program where you will earn the most miles, as intuitive as that may seem. Before deciding where to credit your miles, you should first look at the award chart of the airline you want to earn miles on to see how many miles you would need for an award. In this case with Singapore Airlines’ award chart, I can see that a round-trip flight within the United States (which would be on United) booked through Singapore Airlines is 25,000 miles, or, the same as it would cost if I were booking with United miles:

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But that’s not the only thing to consider. You should also think about how easy it is to accrue these miles. In this situation, I know that I can transfer my Starwood Preferred Guest points, Citi ThankYou Points, AMEX Membership Rewards, or Chase Ultimate Rewards to Singapore Airlines if I encounter a situation where I need more miles to book an award. Furthermore, you also should be aware of any taxes and fees that airlines may add on to your ticket – in this case I know that none would be added for a domestic flight on United Airlines, but Singapore Airlines can sometimes add on thousands of dollars in fees for first-class redemptions on Singapore Airlines.

But let’s say instead this flight earned 75% on Singapore Airlines and 100% on Ethiopian Airlines. Given that there is no other way to accrue Ethiopian Airlines miles other than flying Star Alliance airlines, I might still lean toward earning on Singapore Airlines. Furthermore, you should look to see how easy it is to redeem miles in the program you are earning with. While I know that it is relatively easy to redeem Singapore Airlines KrisFlyer miles (it does require a phone call if you aren’t booking on Singapore Airlines itself), I might be a little bit more skeptical about doing something like crediting all of my Delta Airlines flights to Czech Airways; while Czech Airways generally earns the most miles for Delta flights (usually 100%), a brief search for stories about redeeming those miles indicates it’s nearly impossible.

I should also mention that this strategy should only be used by people who are not trying to attain status with a particular airline. In order to do so, you need to be crediting all your flights to the same airline, and then based on how many miles you fly, you may be able to earn status with that airline, even if you don’t earn nearly as many actual redeeemable miles. As someone who rarely pays for a flight though, airline status (which requires paid flights) has never been something I’ve prioritized too much. Furthermore, all of the calculations about miles earned are assuming you don’t have status – if you do have status, then you’ll need to factor in any multipliers when determining miles earned.

 

Did I miss something? Have a question? Let me know!

 

Cover image: Marina Bay Sands Hotel in Singapore, courtesy of marinabaysands.com