What would you expect to be the most popular post on this blog? Something on lean operations? One of those posts on managing queues? Nope. The most popular post by a wide margin (more than 13,000 page views than the next most popular post) is something Gad wrote in 2011 on how airline ticket prices vary by day of week. The conclusion of that analysis was that Tuesdays are the best day to buy. The story behind this rests on how airlines manage their pricing. While airline revenue management systems are largely automated closing out fare classes on flights as fill up, they do require some human intervention. That intervention tends to happen early in the week as managers evaluate how well leisure fares sold over the weekend.
But is that still true? According to the Wall Street Journal, no (The Best Day to Buy Airline Tickets, Oct 22).
A new deep dive into airline fares suggests Sunday is the best day to find low fares. This is a departure from the conventional wisdom of recent years, when Tuesday was considered the best bet.
Airlines Reporting Corp., which processes tickets for travel agencies and handles about half of all tickets sold, tallied up ticket sales. Over a 19-month period ending in July, 130 million domestic and international round-trip tickets worth $94 billion showed the lowest average price, of $432, was on Sunday. At $439, Saturday’s average is also lower than Tuesday, which averages $497.
The article asserts several reasons for this change. One is that airlines have generally become more disciplined as the travel market recovered from the recession. They are not as prone to rushing out discounted fares since planes are generally more full. Said another way, they are more likely to be raising prices after the weekend than cutting them.
A second factor the article claims is how airlines are using social media. There is no reason to keep to a fixed schedule on releasing discounted fares. News of a sale can be pushed out to Facebook followers on any day of the week.
Do either of these explanations hold water?
I’m not convinced that they do because the analysis the article is based on is asking the wrong question. Check out the graphic above. Note that it gives the average price paid by day of the week. The question is not what people paid; it is what the airlines offered.
The average transaction price depends on what prices are posted and on who is in the market. If the same mix of folks are in the market every day of the week, then any variation will be driven by what the airlines offered. But clearly the mix of buyers has got to change from weekday to weekend. A nontrivial chunk of weekday transactions will be corporate buyers. They stereotypically will be buying closer to their date of travel and will generally be less price sensitive. If someone has to go to Fresno to put out a fire with a client, someone will go to Fresno and it won’t be cheap.
But tickets to Fresno will be purchased during the week. Even if leisure travel buyers are in the market at constant levels over the week, the absence of corporate buyers from the weekend will result in lower transaction prices. Furthermore, there is no reason to believe that the number of leisure travelers is constant over the week. Weekends offer more time to negotiate where the family should go on vacation. That would suggest that there are more leisure buyers coming into the market as corporate buyers take a few days off.
The article even effectively argues against itself, noting that most price cuts still come on Tuesday.
Yapta Inc., a firm that alerts travelers and travel managers to declines in ticket prices, says 21% of the price drops it has recorded happened on Tuesday and 19% on Wednesday. That’s often the result of fare sales launched early in the week.
So if you are looking for a cheap ticket, stick with Tuesday.
