The Internet and Cheap Airfares

If nothing else, the Internet ushered in the ability for schmucks like me to ferret out cheap airfares. And when it comes to air travel, cheap rules. Or so it seems.

SkyBus, for instance, offers 10 $10 seats on every flight. (Don't tell the boss or I know how I'll be getting to India the next time around.) Then there was my mother who found a cheap flight to Tel Aviv, but had to spend a day in Frankfurt and another day in Kiev as part of the bargain. Therein lies the beauty of mining online airfares.

But there's more than meets the eye when it comes to shopping online for that last-minute airfare, at least according to Volodymyr Bilotkach, an economist at the University of California, Irvine.

In a survey of ticket prices for 238 routes, I was disappointed to learn that Bilotkach found that the cheapest last-minute fares on Orbitz.com averaged $34.46 -- that's 8.5 percent less than comparable deals available through Southwest, my favorite airline. Jeez, after years of flying Southwest not just for its cheap seats but also for its tasty snacks, this was, well, devastating news.

Southwest sells most of its tickets online but does not make its fares available via major online travel agents such as Orbtiz or Travelocity, which aggregate tickets from major airlines and allow customers to compare prices.

"The research suggests that Southwest exploits its low-cost reputation with last-minute travelers who feel they don’t have time to shop around, even if it’s just a few extra minutes," said Bilotkach.

For his study entitled Reputation, Search Cost, and Airfares, Bilotkach compared flight costs at nine airports with substantial Southwest Airlines presence. He recorded quotes for fares between the same cities with the same travel dates, checking the fares one month in advance of the travel date and again at the last minute -- one or two days before the flight. With his research assistant Lisa Nguyen, Bilotkach got the fare quotes from Southwest and Orbitz at nearly the same time.

Overall, Southwest’s lowest advance purchase fares averaged 2.7 percent below the cheapest tickets found on Orbitz for a comparable flight. These findings support previous research showing that Southwest tends to offer better deals and helps keep prices lower among its competitors.

But for last-minute tickets, the average cost was 8.5 percent more expensive on Southwest. About half of the time, a cheaper ticket could be found through Orbitz.

"When it comes to last-minute fares, Southwest’s prices are about normal," said Bilotkach. "It’s important for consumers to remember that just because an airline is known as the low-cost leader doesn’t mean it’s always got the best deal -- especially for last-minute flights."

The difference between Southwest’s fares and the cheapest fare found on Orbitz was greatest for long-haul flights and also slightly greater for North-South routes, such as a round-trip from Chicago to Florida.

For a description of how Orbitz.com improved its throughput and performance, see High-Performance I/O with Java NIO.

For an overview of Orbitz's technology, see the article Orbitz Reaches New Heights.

But does this all mean for me? Well, according to the boss, it's spelled "Greyhound".

Posted by Jon Erickson at 10:09 AM  Permalink