With summer staring us in the face, thoughts are definitely starting to turn to summer vacation plans. Given this, we wanted to help answer that age-old traveler question (no, not “should I eat before or after security?” – we already did that for you!); The other question - “Should I book now or wait?”
We all have that friend who watches airlines prices over a several week period, sees the prices go lower at some point, and then finally buys a ticket. However, this is the exception rather than the rule. In most cases, you should book the minute you finalize your plans (well, actually wait until the Tuesday or Wednesday after you finalize your plans) Why book now? In short, prices almost always go up. Feel free to leave this post now to book your travel, or read on if you want to know the actual reasons why prices overwhelmingly go up as we get closer to the summer.
The first reason why this happens is simply supply and demand. Better weather and family vacation means more trips taken. Car, hotel, and airline companies all recognize this spike in demand and they start increasing prices around Memorial Day (aka – this weekend!). As time goes on, supply decreases, raising the prices even more. This macro analysis of seasons holds true on the micro scale of hours too, so look for off hours to travel. Instead of staying another night and catching the first flight out in the morning, take the last flight out the night before. While we all love to hate on the airlines (especially when they start charging us extra for a window seat), in this case, we can’t blame the airlines - we all sold lemonade at a higher price on those hot days.
Another reason that prices increase in the summer is because of the difference between winter grade and summer grade fuel. Without getting too technical (you can read more here if interested), because of seasonal differences winter-grade fuel is able to use more butane (which is cheap) as an additive in the mix of the fuel. It is because of the higher standards in summer that the cost of fuel actually goes up (again, the airlines deserve all the hate we given them, but this is one instance where they actually have a leg to stand-on, versus their lovely $150 change fees).
Flights to Europe this summer. Forget about it. With a recovering economy, falling euro, and the Summer Olympics being held in London this year don’t expect cheap flights. Over 500,000 international visitors are expected via air. On the busiest days, passenger levels will increase from the average of 95,000 to 138,000. Talk about increase in demand!
Lastly, the airline business is a tough business. Though not unique to the summer, the recent mergers and consolidation in the airline industry does hurt the consumers’ wallet. Continental and United, Northwest and Delta, AirTran and Southwest—and who knows what will happen to American Airlines. Simple economics as we all know, fewer airlines competing mean fewer reasons to drop prices to win your business.