For businesses that are keen to keep a tight reign on spending, one of the proven strategies to boost airfare savings is advance purchase.
Whether your company uses a preferred carrier or uses an open sky policy, there are signifi cant savings on airfares to be made by being prepared, planning ahead and booking early.
Fare classes – how they work
Over the years, airlines have developed complex strategies for managing yield and, as part of this, seats throughout the aircraft are grouped in ticket booking classes.
Generally airlines will sell only a small amount of 'headline' fares for the cheapest seats in Economy Class. The remainder of Economy Class seats are staggered in price with fully flexible Economy Class tickets costing more. Generally, last-minute tickets are more expensive, as the cheaper seats, which are fewer in volume sell out first.
The availability of different booking classes on airlines around the world is influenced by a range of factors including season, demographic, fare restrictions, market (domestic or international) and inter-airline agreements.
Beware of the last minute fare
A recent FCm study indicates that travellers will pay on average 20% to 40% more for a ticket bought at the last minute, depending on which airline you fly with.
The study was conducted during a two month period (September and October 2013) using fares for 10 major domestic routes. The study compared ticket prices, for bookings made one day before departure, two to five days, six to 10 days, 11 to 20 days and more than 21 days in advance.
Using a departure date of 9 October, the study tracked advertised fares for flights between 6am and 8am by three major Australian airlines. The results show clearly that bookings made two to five days in advance and one day prior to the departure date were on average significantly higher for all three airlines.
According to the study:
• passengers travelling on airline 'A' would have paid on average 19% more if they booked a day before departure
• passengers travelling on airline 'B' would have paid on average 42% per cent more
• passengers travelling on airline 'C' would have paid on average 35% per cent more.
It's important to note that savings on domestic tickets across carriers will fluctuate throughout the year according to daily prices, however the snapshot of fares used in this study is a good indication of how businesses can reduce their average ticket price (ATP) by booking as early as possible.
Reducing your ATP
Your FCm travel manager can show you how to reduce your ATP using an advance purchase strategy for fares that are best suited to your travel needs. If you have implemented an open sky policy in your travel program and therefore use best fare of the day, there are still savings to be made, particularly if booking during peak periods.
FCm's study shows that average ticket prices during times of low capacity generally rise five days prior to the departure date, with the lowest fare for the route generally advertised 21 days or more out from departure. During peak travel periods, fares start to rise much sooner, making advance bookings a particularly important cost cutting strategy. During peak and high capacity periods, such as Christmas, last minute fares can more than double.
While a fully-flexible ticket may cost more, they are refundable and can be changed at any time. When booking in advance, travellers need to be mindful that a cheaper, restricted ticket will have more conditions attached to it, therefore travellers need to know their plans aren't going to change to ensure no additional fees are incurred through booking changes. If you’re not sure what time you’ll be ready to fly home, consider booking a restricted ticket for the outbound flight and a flexible fare for your return trip. Outbound flights rarely need to be changed, where as return flights often require more flexibility. Restricted fares won't be suitable for all business travellers, however your travel manager can help you to book the right fare for your needs.
Fly with your preferred carrier and save
Your FCm account manager can help you negotiate an agreement with your preferred carrier. Depending on your volume of air travel, this agreement may include discounts on fare classes. Companies with airline agreements can use an advance purchase strategy and still meet their contracted targets.
Include advance purchase in your policy
You can enhance your overall travel performance by including guidelines in your policy around advance purchase. Communicate your policy clearly and effectively to all your travellers and make sure they know what the business is trying to achieve and why.
Tougher economic conditions have seen companies in some industries introduce a two week advance booking policy in their travel programs. And some companies that have hundreds of fly-in fly-out staff on a roster may book up to eight or nine months in advance to secure the best prices.
Booking in advance isn't always going to work in the case of emergencies and unforeseen events, but when travellers know an event is happening a few months or weeks ahead, best practice demonstrates it's wise to book ahead.
There needs to be a common mindset in your company when it comes to advance bookings and educating your employees is a crucial part of this. Your FCm travel manager can help you proactively inform your travellers and travel bookers on your policy and how it affects them, what your company's goals are, the benefi ts of your travel policy and the savings that are achieved as a result of compliant travel behaviour.