I’ve been traveling for nearly twenty years, and airline travel has changed dramatically. Ticket prices have risen steadily, often seeming arbitrary. Here’s a clear look at why airfare costs so much and what you can do about it.
Why fares are higher
– Consolidation and less competition: Over decades of bankruptcies and mergers, major carriers have thinned out. In the U.S. three big airlines dominate many routes; Canada has two majors; Europe is led by a few large groups (though low-cost carriers help there). Fewer carriers on a route means less incentive to compete on price.
– Much higher fuel costs: Jet fuel prices have increased sharply, and those costs are passed to passengers.
– Increased taxes and fees: Airports and governments add taxes and security fees that can make up a large portion of a ticket—on some routes, like into London, fees are massive.
– Reduced supply of flights: After recessions and especially after COVID, airlines cut routes, grounded older planes, and furloughed staff. When demand rebounded, capacity remained constrained, so airlines could fill fewer flights and charge more.
How airlines set prices
Airlines balance competition, supply, demand, and fuel costs to hit a target “load factor”—the percentage of seats filled. Since planes have fixed capacity, airlines use dynamic pricing and advanced algorithms (AI) to maximize revenue per flight.
These systems monitor booking patterns, historical data, events, weather, and competitor behavior. They adjust fares in real time: when demand spikes, prices go up; when demand softens, prices fall. That’s why a fare might be $100 one day, $400 the next, then $100 again. It’s not personal tracking—it’s automated response to supply and demand.
Fares are bucketed into multiple price points. Early low fares may disappear once sales reach certain thresholds. Airlines start managing the lowest price buckets a few months before departure, so booking too close to your travel date often means paying higher prices because you’ve lost flexibility.
When prices move quickly, it’s usually because several booking systems are reserving remaining seats at the same time. Limited routes and higher overall demand mean airlines don’t need to discount as much as before.
How to avoid overpaying
– Be flexible with dates and times: Early-morning or midweek flights are often cheaper. Avoid peak holidays and major events.
– Book ahead but not too early or too late: Airlines adjust low-price availability around three months before departure. Booking inside a month usually favors the airline.
– Use good search tools: Metasearch engines that scan many sites and airlines (for example, Skyscanner) help find more options.
– Use travel credit cards and points: Earning miles can offset or eliminate fares if you know how to redeem them effectively.
– Monitor prices and set alerts: Watch trends for your route and be ready to buy when the price dips.
– Consider alternate airports and connecting flights: Flexibility on routes can save money.
Additional travel tips and resources
– Accommodation: Use Hostelworld for hostels and Booking.com for hotels and guesthouses to find competitive rates.
– Travel insurance: Protects against illness, injury, theft, and cancellations. Consider providers geared to your needs (budget, mid-range, older travelers) and look into medical evacuation coverage if needed.
– Rental cars and activities: Use comparison sites for car rentals and marketplaces for tours and experiences to find deals.
The new normal
Cheap airfares like those of the past are largely gone. Consolidation, higher costs, and constrained capacity mean tickets will generally cost more. But by understanding how pricing works and staying flexible, you can avoid paying the highest possible fare and still find reasonable deals.
