With prices for air travel fluctuating so frequently, knowing when to buy and when to wait for a better deal to come along can be tricky. Fare predictor apps such as Hopper and Google Flights aim to take the guesswork out of “farecasting,” but can such tools accurately predict when airfares will soar and when they will plummet? And can these apps really help business travelers, whose needs are much different than those flying for leisure?
To find out, we spoke to our top air specialists: Jeremy Quek, principal of air practice line lead with Global Business Consulting (GBC), the advisory arm of American Express Global Business Travel (GBT), and Eric Olson, senior consultant of air with GBC. Both also have an intimate understanding of how carriers set their fares from previously working at major airlines.
Based on historical data
From what Quek and Olson understand, many of these fare predictor app algorithms heavily rely on historical flight data to make their predictions. And that in and of itself is one of their biggest weaknesses, they say.
When you make a prediction based on historical data, you are looking at what happened in the past and reacting to that. “That means you’re always trying to play catchup,” Quek says. “But the airlines are always a step ahead.”
That’s because the airlines have invested a ton of money to develop very sophisticated systems that forecast future flight demand.
“These are incredibly smart data models built by incredibly smart people,” Olson says.
Because these systems alone “are not good enough to optimize prices,” Olson explains that carriers also employ a vast team of analysts who interpret on a day-to-day basis the information the systems are spitting out to anticipate what’s to come.
The other downside of basing pricing trends on historical data is that it doesn’t do a great job of taking into account other factors that can influence demand, such as conferences drawing large crowds to a particular city or travel disruptions like 2017’s brutal hurricane season.
Not ideal for business travel
As Olson points out, these apps also are not a good fit for business travelers, who generally do not have the luxury of waiting and watching to see when prices may drop — they are in a “must go” situation and have to be in a specific location at a specific time.
The other thing is, with business travel you typically are not able to plan and book months in advance, when generally the cheapest fare is offered. A more common scenario is that these travelers are booking a few weeks or even days before their departure. At this late stage of the game, it doesn’t make a whole lot of sense to use a fare predictor app.
“If you were going to study the recommendations that some of these air prediction apps have for flights the last weeks or month of departure, they are almost always going to say, ‘Buy now, the price is going to go up,’” Olson says, explaining that traditionally “the likelihood of a price staying steady or steadily climbing is greater” as you near the departure date.
Corporate travelers pay big time
As Quek learned from working in the industry, the airlines profile travelers by studying their habits and patterns to understand how they can profit the most from their customers.
For instance, he explains, the companies know very well that most corporate travelers flying across the Atlantic from the United States depart on a Sunday or Monday. Airlines take advantage of this fact by jacking up the prices on these days, and it can be difficult for business travelers to get around this.
“With corporate travel, you don’t necessarily control when you are traveling since you have to travel because of business reasons,” Quek says, but if you can leave on a Tuesday or Wednesday, “you are much likelier to get a better price than if you were traveling on what we typically call a ‘corporate business travel day.’”
Olson adds that booking an early morning flight — like 6 a.m. early — also can be a cheaper time to fly.
What else can corporate travel managers and travelers do to avoid paying top dollar when fares are purposely stacked against them?
First, find out what kind of discount you may be privy to through a travel management company (TMC).
Clients of American Express GBT have access to the competitive rates we have negotiated as one of the largest TMCs; that will help you to save not only on all your air travel but on your hotel and ground transportation as well.
While price-conscious travelers may be tempted to go for what the airlines call “basic economy,” Quek warns that this rock-bottom fare is not really intended for a corporate audience since it comes with many limitations, such as no refunds or changes.
“Our advice to clients, big and small, across the board has been really to understand what they are buying,” Quek says, explaining the restrictions that come with basic economy vary across different airlines, so it’s crucial to read the fine print.
Make a deal
Another way to rein in air spend is by negotiating discounts with carriers in exchange for a large amount of business.
“Even if you are a midsize company that doesn’t have a large amount of spend compared to some of the big guys, you still have a travel pattern and typical routes that the airlines might have strategic interests in and be willing to offer a discount, likely in exchange for a volume share commitment.”
When preparing for these negotiations, Olson says not only is it important to have a clear understanding of your travel pattern and spend but also a clear vision of what your travel program’s priorities are. “It’s quite common that organizations don’t understand the direction they want to go.”
Are costs your most important priority? Or is it productivity? If the latter, you may decide that springing for business class seats for an overnight flight is worth it if it means your travelers land at the destination well rested and sharp for a full day of meetings.
Quek adds that it’s not only vital to have a good handle on past travel patterns and routes for the negotiations but also to know what the future may hold. “Is there going to be growth within the travel program? Will there be new travel patterns that you know of either because of mergers and acquisitions or new developments?”
If so, he recommends sharing how your travel program is evolving with your suppliers during the (re)negotiating process to see if you can land a better deal.
Finally, as Olson advises, for those who are just starting down this path and going “from unmanaged spending or ‘free booking’ spending to a deliberate, negotiated and steered spending pattern,” American Express GBT is here to help walk you through the process, including how to establish parameters through the online booking tool and within your travel policy.
To learn more about how our GBC specialists can assist with your air travel program, please contact us at email@example.com.