Why you shouldn’t worry about a $10 fare hike

There was a big stir in the travelsphere last week when travel pundits and news organizations announced that leading domestic carriers had raised round trip fares by as much as $10 across the board. At a time when unemployment is sky high and airlines are making cash hand over fist, this is the time that they decide to raise fares? Skullduggery! Fat cat ballyhoo! We blame global warming and Wikileaks!

It’s true, airlines did just increase the price of some round trip fares by up to $10, but we’ve been crunching the numbers at Gadling Labs and we don’t think that the outrage is necessarily deserved.

Here’s the thing: It’s true that airline prices are governed by the price of oil, labor and material goods. But another, larger factor in play is competition in the marketplace. Why is the ticket price between Chicago and Kalamazoo more that of a ticket between Chicago and Seattle? It’s not because of oil, it’s because there’s more competition on the latter route. Why do tickets to any Southwest or Virgin America hub seem to be cheaper than any other ticket in the country? Because legacy carriers are trying to underprice the low cost carriers. So despite that fact that all of the carriers increased prices last week, it’s a matter of days until one underprices another and the whole bidding war begins again.

Another factor that isn’t accounted for is fare sales — or rather, the everyday fluctuation in ticket prices and fare buckets. Based on the date of travel, an unforeseen sale on tickets or the volume of availability, the ticket to Orlando that you buy today could cost half or twice as much as it does tomorrow, irrespective of the fare hike.

Point is, a lot of factors go into determining the everyday price of your airline ticket, and the general, base fare published is affected by a whole host of factors that make your ticket price go up and down. Smart, savvy travelers keep their eyes on fare sales and jump on a ticket when the price is low. Our advice? Channel the negative energy used worrying about fare hikes into setting up a fare alert and finding better prices.

For more articulate discussion, check out George Hobica’s article over at Airfarewatchdog.

[Flickr image via Brian Harrington Spier]