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Fare level rules how discounts are used

Here is one from the Travel Professor’s email inbox: “We have some coupons that offer $25 up to $100 off the cost of an airline ticket.

An on-line fare search yielded a $278 roundtrip rate but when we applied the discount code to the reservation the price increased by over $100. Can you explain why?”

It’s simple. You cannot discount an already discounted fare — the $278 one.

Your discount can only be applied on certain classes (types or levels) of airfare. As the booking class changes so do the fare. It also increases.

The airlines have moved you to a higher fare level that they will gladly permit you to use the discount coupon. For example let’s say you found a Huntington to Las Vegas roundtrip fare for $278.

This is the airlines super saver lowest rate and a non-discountable fare.

If you read the coupon’s fine print I’m sure you will find a phrase that reads “coupons cannot be used with fares booked in V, M, T, Z, L, Q or N class of service”. I’m sure that your $278.00 ticket is booked in one of those classes of service so you can’t use it..

The fare that allows a coupon has to be reserved in B class and in this case the roundtrip fare is $478. Subtract the coupon savings of $100 and there is your $100 increase.

All of these different fare levels exist on one specific airplane flight on a certain day so the combination of pricing is mind boggling.

This pricing phenomenon occurs mainly on air travel as the other industry components handled their pricing differently.

Cruise lines and hotels use the location and amenities in their cabin/room to establish tariffs.

A parking lot view compared to an ocean front room impacts the cost not the class of service.

A few carriers mainly the no frills discounted ones have figured this pricing dilemma out and offer only a handful of rates.

These airlines tend to fly full planes and operate for a profit while the other airlines are still playing catch up.

For revenue management the airlines give each class of service on a specific flight a certain value.

The seats are all located on the same plan but you are paying $109 for an L seat as compared to $159 for a Q seat.

They also capacity control these by offering let’s say 10 L seats on a flight and when these are sold your upgrade to the next higher more expensive Q seats.

For a good example take a look on-line at Southwest Airlines fares. Their lowest fares-termed web specials-could be booked in L class. The next highest fare is the Q seat.

An example I use in the class room to demonstrate this pricing policy is to letter the seats and assign the letter monetary values. With an inventory of 30 seats I’ll capacity 10 in L class at $100, 10 in B class at $175 then 10 in Y class priced at $250.

Once the students are settled they remove the note cards from the bottom of the chair and we talk about what we have sold on that flight.

Everyone is in the room (on the same flight) but we have different prices because of inventory control.

Seat inventory adjusts hundreds of thousands of times daily as passengers make booking, cancelations and the airline revenue gurus try to squeeze out more dollars for each flown seat mile.

Due to these actions I suggest that you frequently check out price and flight availability on your desired travel dates.

I use the fare watcher function on Travelocity.com which automatically alerts me with an email when my watched city pair flight prices change.

Personally I have what I term a price threshold. This is a range of what I’m willing to pay to travel between point A and B.

When the price falls into this range then I will normally purchase the ticket.

Be kind to your travel agent and get out town.

Got travel questions and/or concerns? Email thetravelprofessor@gmail.com.