There’s some simple math when it comes to airfares: the higher the price, the bigger the profit. The most expensive tickets tend to be those sold at the very last minute—specifically those picked up by business travelers with schedules dictated by sudden deals and unexpected client meetings. And not coincidentally, these fares are usually paid for by the company.
It also turns out there are some marked differences in buying habits among industries, according to data released on Thursday by Concur Technologies Inc., which analyzed 25 million airline ticket sales last year across nine industries. Perhaps unsurprisingly, professional service fields, such as lawyers and consultants, bought more than a quarter of their air tickets within three days of a trip, the largest segment. That makes for some pretty pricey seats.
Media was next, at 20 percent—since news events often tend to erupt without warning. At the other end of the spectrum is higher education, with 68 percent of tickets in that field being sold 15 or more days before a trip. Industries such as energy, financial services, manufacturing, and technology fell in the middle of the spending pack.
Airline tickets booked less than a week before departure are 44 percent more expensive, on average, than the same ticket booked 15 or more days in advance, according to Concur, which sells corporate travel and expense-reporting services. (German software giant SAP SE acquired Concur for about $8 billion in 2014.)
Airlines manage their inventories to hold some seats open on most flights for corporate travelers. They’re also keen to sell as many last-minute tickets as they can, a lucrative category the industry terms “close-in bookings” and which tend to yield fatter margins.
These tickets are critical to a carrier’s overall financial health. U.S. airlines suffered an almost two-year revenue swoon starting in 2015, with weak pricing power eventually spreading even to last-minute tickets. Some carriers, meanwhile, set fares for same-day tickets the same as those sold far in advance—a huge bonanza for business travelers.
Source Credit: Bloomberg Businessweek