Airline Ticket Purchase Timing

Feb 1, 2012 by

An organization called the Airlines Reporting Corporation (ARC) released on January 17 the results of its research designed to answer a question pestering humankind almost since the Wright Brothers’ Kitty Hawk flight: When is the best time to buy air travel tickets to get the lowest fare?

What’s the Airlines Reporting Corporation?

Being naturally suspicious, I looked into ARC. Perhaps, I thought, it’s a front group for the airlines tasked with inventing even more ways to extract money from air travellers. According to its website, “ARC is a premier provider of sales and settlement solutions for the travel and hospitality industry.” Premier—that’s a good word. The impenetrable rest of the sentence I could not satisfactorily decipher even after rooting around on the ARC’s site. But I gather the company sells products that airlines, among others, find useful. Then, on the About Us page, the smoking gun:

“ARC is an airline-owned company serving the travel industry with financial services, data products and services, ticket distribution, original travel solutions, and settlement in the United States, Puerto Rico, the U.S. Virgin Islands, and American Samoa.”

So, while I relate the results of the ARC research below, in my mind they’re accompanied by a giant asterisk leading to a footnote reading: “Research paid for by parties with a big financial stake in the outcome.”

ARC Research Conclusions

The first paragraph of a press release publicizing the research summarizes the major finding:

“ARC announced today that based on research into the purchase price of airline tickets in 2011, airline passengers acquired the least expensive airfares six weeks in advance of their flights. At that point during any given 120-day advance purchase period throughout 2011, flyers paid 5.8 percent below the year’s average fare of $358.30. ARC determined this by examining close to $80 billion worth of ticket sales, spread across almost 144 million transactions, for flights with a U.S. origin and destination.”

Mr. Chuck Thackston, identified as ARC’s managing director of data and analytics, helpfully adds this:

“We’re not advising people to purchase tickets only at this time during the cycle as there is no guarantee they will receive the lowest price of the year; it is just what the data indicates and we have seen this pattern over the last four years.”

Seems ARC and Wall Street have the same disclaimer-writing attorney: “Past performance does not forecast future results. We’re just saying.”

According to ARC’s research, fare prices begin soaring about 14 days before the travel date. The average ticket price on the travel day is about $140 (40%) more than the average fare 14 days prior to the travel date. ARC also reports that the average 2011 ticket price for U.S. air travel was $368. Unstated is whether this includes additional fees for burdening the airline with your baggage, asking an airline employee a question, or securing a place to sit down during your flight.

ARC produced a short video, starring Mr. Chuck Thackston, to explain its findings.

Based on your experience, does the 6-weeks-out finding seem reasonable?

  • http://www.arccorp.com/ Peter Abzug

    Hi Kurt, Thanks for picking up our press release. Let me try and clarify some of your points about ARC for your readers.

    Yes, it is true that ARC is owned by a group competing airlines. (A shared ownership between Air Canada, AirTran Airways, Alaska Airlines, American Airlines, British Airways, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Lufthansa, United Airlines, and US Airways.)

    The reason why ARC was created 1984 was to settle the transactions between travel sellers, such as travel agents (including online travel sites like Expedia) and airlines worldwide. This means that 14,000 travel agents and 193 airlines can access each other without having to create individual contracts, billing, paper flow, etc. With ARC, agents and airlines have one standard agreement to do business together. (Can you imagine an airline having to write and manage 14,000 different contracts or a small travel agency trying to do the same with almost 200 airlines?)

    We process 144 million transactions a year that are worth $82 billion and know the price of every ticket purchased. That’s a lot of data. Sometimes we query that data to see what it can reveal. And in this case, the data showed that, based on the actual ticket purchase amounts and dates, six weeks seems to be the sweet spot for getting the best price. Which actually surprised us because we thought, as a lot of people do, that the further out from flight time you buy a ticket the cheaper it is. It turns out that this is not the trend.

    But Kurt, if you want to imply that the airlines get together in some sort of smokey room to scheme and try to get people to buy their tickets during a time when they are the highest, that’s your right…I guess. But that couldn’t be further from the truth. ARC employees are ARC employees and our owners act together as an oversight unit with no day-to-day management…they have a lot of other issues to deal with, such as fuel prices. With a few exceptions, ARC employees pay the same price for our air tickets as everyone else. So we, just as any informed consumer, want to have the best information to make the wisest purchasing choice.

    Oh yes, about ARC’s “disclaimer-writing attorney” who made sure we said that this finding isn’t a guarantee that you will always get the best price six weeks out…that “attorney,” or should I say “non-attorney” is myself with a very different degree, notably in Journalism. By making this statement, ARC wants to make sure that, based on our report, consumers won’t stop looking for good deals after the 6-week mark. ARC is just pointing out the trends based on Purchases, not on Offers.

    By the way, why would any airline (or groups of airlines) want to discourage a consumer from looking for a ticket at any point in time? That just does not make sense. I wish you would have contacted me to better understand ARC’s role and the accuracy of our data before you wrote your article. (My contact information was on the release.)

    I hope this adds some understanding and context for your readers, and that they use the content of your article as one piece of information to purchase the most affordable airfare possible.

    Regards,

    Peter Abzug
    Director, Corporate Communications
    ARC, Inc.

    P.S. I invite you to visit our website and go to this link to see the latest sales statistics. You might find it interesting. http://www.arccorp.com/news/stat/2011-12.jsp I also invite you to contact us if

    • Money Counselor

      Mr. Abzug, thank you for your input. Any implications made in this post regarding “smokey rooms,” etc. were meant to be tongue-in-cheek and mostly to give Money Counselor’s readers a little amusement while they absorb the results of ARC’s research. I concede the tone and approach of some Money Counselor posts may be a bit unconventional; you’d have to follow the blog for a little while (which I hope you do!) I think to recognize the approach for what it is. My guess is what most readers of this post (or the ARC press release) will remember about it is only this: Buy airline tickets 6 weeks prior to flying!
      I have no reason to think ARC is anything but a fine company and that its employees are hardworking, honest people, and I’m grateful to have learned more about it. I encourage Money Counselor readers to absorb your comment and add to your critique of the post if they feel its deserved.
      Also, it appears the comment control system may have terminated your comment before you were done writing (there may be a maximum length). Please feel free to comment again with the remainder, if you’d like.

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