Why Airfare Discounts Have Returned

The next time you hop on a plane, try this simple exercise: look around at your seatmates and guess whether they paid more -- or less for their tickets -- than you did. It shouldn't come as a surprise that some paid perhaps half what you did while others may have shelled out three times that much.

As they say, "timing is everything" and that is absolutely true when it comes to buying an airline ticket. Pick the right time, and you'll be in that small group on the plane that paid the cheapest price; pick the wrong time, and you'll be staring down the barrel of a $1,000 ticket.

Unfortunately the "right time" or what I like to call the "best time" to buy an airline ticket isn't something the airlines could tell you -- even if they wanted to.

Case in point: in the past three weeks, the domestic airlines initiated several holiday and winter airfare sales -- to spur on slumping demand -- mostly related to the unforeseen meltdown in the global economy. Only a few short months ago, the prospects of holiday discounts seemed unthinkable, as airlines slashed 200,000 seats daily to survive at $130 a barrel oil -- oil that now has collapsed to around $50 a barrel.

Those who "wisely" purchased holiday airfare early (me included) are now watching in disbelief as procrastinators slide in at the last minute -- and scoop up all these great deals. There is some hope, however, for those holding more expensive tickets: Alaska, United, Southwest and JetBlue will refund the difference in price for the same flight -- typically as a voucher for future travel -- while other airlines charge fees that range from $50 to $150 per ticket to make these changes.

Better get used to this.

Air Chaos in 2009

Air travelers should be prepared for more airfare pricing chaos in 2009. Airlines say they are willing to cut even more seats if demand continues to wane -- in order to keep flights full and prices up. U.S. carriers have been uncharacteristically disciplined the past few years, so I am inclined to take them at their word.

At the same time, the airlines are going to have to deal with a substantial drop in their most lucrative customers -- the business travelers -- who are likely to pull back as their companies adjust to the worsening economy. Now, is it possible that airlines could actually discount business prices in 2009? Lower the cost of those tickets that typically cost $800 to $1,000 roundtrip? They might not have any choice -- I suspect enough empty seats and the threat of widespread adoption of video conferencing could warm up even the coldest airline pricing guru's shoulders.

Just to make things more confusing in 2009, look for what the network legacy airlines are calling "attribute pricing" -- otherwise known as unbundling. Early next year, shopping for airline tickets will include a bigger smorgasbord of "extras" you'll have to pay for at checkout -- options like meals, frequent flyer bonuses, plus a greater variety of bag fees and seat selections. Comparing airline A to airline B will be even more of a chore for the online shopper.

But don't despair -- chaos in ticket pricing means there will be opportunities to score travel bargains -- for those willing to keep a close eye on the marketplace.

The Cheap Ticket Formula

After studying the nuts and bolts of airfare pricing for years, I have come up with several rules of thumb that should help most travelers get a better deal. Here are a few:

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