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Lies, damned lies, and airfare statistics
Recently, I was asked by a news service if Airfarewatchdog would be interested in providing airfare statistics on various routes to compare average airfares from month to month and year to year. I don't think this was the answer they were hoping for, but this is what I told them:
It's really, really hard to get accurate, meaningful airfare statistics. In fact, it's pretty much impossible. There are so many different types of fares sold, such as consolidator (bucket), corporate, and negotiated fares, in addition to published airfares. And airlines do not divulge, for competitive reasons, how many seats they actually sell at what fares on what routes. The airlines' published fares are public record, and they do report overall revenue figures for the airline as whole, but ticketed fares route by route, or airport by airport? My friends who are airline insiders tell me it'd never happen.
As Singapore Airlines spokesperson James Boyd explains, "When an airline launches a sale, it's an attempt to grab market share. An airline would never publicize how many seats were sold at what price on what routes, because it would give competitors too much information."
The best one can do is to compile sales data from large ticket sellers, such as Expedia, Travelocity and Orbitz, route by route, and figure out what consumers actually paid for their tickets over various time periods. Still, this data will not include all fares sold to the public (in addition to the fare types mentioned above, airlines are increasingly selling special promo code fares on their own web sites in order to drive web traffic and undercut the third party online agencies). And none of the online travel agencies sell Southwest Airlines' or Allegiant Airlines' fares, so that's another missing piece of the puzzle.
Most importantly, beware of anyone offering fare statistics if they do not sell seats. There is a huge difference between published fares and ticketed fares.
"Sold versus published does provide a better window into the real world," confirms airline industry consultant Bob Harrell of New York City-based Harrell Associates. "It's just harder to get [the] data."
For example, in January American published fares from Delta's US hubs to Lima, Peru for $330 return, including all taxes. These routes are normally twice that or even higher. A source that merely tracks the ups and downs in published airfares might report that fares on that route came down over 50% in January 2009. But is that accurate? How many seats were sold at $330 during this unadvertised sale? How many at $500? How many at $600? How many were sold through consolidators on that route in January? Just because the published fare went down to $330 for a brief period, doesn't mean that the average fare on that route paid by consumers was $330. There's simply no way of really telling, unless you can aggregate data from each airline serving the route, and the airlines are not going to share this information, because it will give competitors too much information.
As a journalist, it makes me cringe when I see a news report stating that "Airfares went down 15% year over year," without revealing the methodology for determining that statistic and all sources providing data. Was that published fares or ticketed fares? If ticketed, what was the source? If published, how was the statistic calculated? And did this include taxes and all ancillary fees paid by passengers on that route, from that airport, or during that time frame? Unless a source or journalist shares all this background information, airfare statistics are, if not exactly lies, meaningless and misleading.
George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.
"Sold versus published does provide a better window into the real world," confirms airline industry consultant Bob Harrell of New York City-based Harrell Associates. "It's just harder to get [the] data."
For example, in January American published fares from Delta's US hubs to Lima, Peru for $330 return, including all taxes. These routes are normally twice that or even higher. A source that merely tracks the ups and downs in published airfares might report that fares on that route came down over 50% in January 2009. But is that accurate? How many seats were sold at $330 during this unadvertised sale? How many at $500? How many at $600? How many were sold through consolidators on that route in January? Just because the published fare went down to $330 for a brief period, doesn't mean that the average fare on that route paid by consumers was $330. There's simply no way of really telling, unless you can aggregate data from each airline serving the route, and the airlines are not going to share this information, because it will give competitors too much information.
As a journalist, it makes me cringe when I see a news report stating that "Airfares went down 15% year over year," without revealing the methodology for determining that statistic and all sources providing data. Was that published fares or ticketed fares? If ticketed, what was the source? If published, how was the statistic calculated? And did this include taxes and all ancillary fees paid by passengers on that route, from that airport, or during that time frame? Unless a source or journalist shares all this background information, airfare statistics are, if not exactly lies, meaningless and misleading.
George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.
Filed under: Business, Airlines, Budget Travel, Consumer Activism
Reader Comments (Page 1 of 1)
Court Jan 12th 2010 11:58AM
If I'm not mistaken, isn't this exactly what the DOT's DB1B database is?
Paul Jan 14th 2010 8:53AM
According to
http://128.173.204.63/courses/cee5614/cee5614_pub/Supply_aircraft_cost_model.pdf.
the database is a 10% sample of the data.
Court Jan 14th 2010 10:43AM
If you're looking for averages, as they are in this instance, a 10% sample is statistically sufficient.
Nick Jan 12th 2010 11:55AM
I was, unfortunately, one of those people who'd take the "Airfares went down 15% year over year," kind of statements on their face value.. until now! Thanks for posting this article - it was informative and eye-opening. However, I have to wonder why this area is so unregulated? The current airline pricing may not be unfair or illegal, but it definitely seems to be slightly deceptive and a lot less transparent. I believe the public should have a right to the kind of data you talk about (that is currently very hard to get). Lack of transparency in pricing opens up the possibilities of unhealthy collusion among players and price-fixing.
Adam Jan 14th 2010 1:24AM
The major airlines' pricing systems are notoriously complex, and intentionally so. They're all dictated by "Revenue Management," a department within each carrier nearly as insular and non-disclosive as its obscure name would suggest.
Revenue, or yield, management was largely devised under Bob Crandall, the shrewd American Airlines CEO during the 1980s and '90s. Basically, instead of offering two or three fixed fare prices per flight, he turned airfares into an auction. He'd offer a few low-ball tickets per flight, advertise those fares aggressively, and then sell the other 95 percent of the tickets at variably higher cost.
The automated system Crandall helped create to handle revenue management was called Sabre, and is now a standard system for airlines and hotels. Using grad-school level calculus, the revenue-management people and computers can estimate to a startlingly accurate degree just how many seats to sell at lower and higher fares, and at what prices to charge for them, to maximize revenue per flight. There are literally dozens of variables that get input automatically from the airlines' reservations systems, including how many people are buying which fares how often per day; that data is processed by Sabre to advise Revenue Management on what to charge for a given ticket.
No single person could tell you what the airline is charging, and, except for certain promotional fares in which the airline is seeking publicity, rarely does anyone outside of Revenue Management attempt to override the department's judgment. If you were looking for the shadow government, this might be as close as you'll get. Evil? No. Just incomprehensible, and highly efficient.
Rick Seaney Jan 19th 2010 12:18AM
Please tell me you have more than
a) Example of a temporary cheap lowball airfare to Lima, Peru
b) Quote from an airline spokesperson that charges 30-60% more than the competitive market (because it can)
c) And a quote confirming that airlines don't courier their seat sold data each day to competitors, investors or the press
Before you call someone a liar