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Airline Ticket Pricing: How Is AirFare Calculated

how is air fare calculated

Domestic airfares have shot up three times. Fliers are paying big amounts to fly from one Indian city to another. Delhi to Mumbai airfares crossing Rs.15000 every day, as quoted by Congress Leader KC Venugopal. Amidst all this chaos, finding the best deals on flight bookings can easily help you plan your holiday perfectly. You might have tried numerous strategies and plan changes to get the best deals on flight bookings. If you are a frequent flyer, you might often be curious about how is airfare calculated. Beneath the final airfare quoted to the customers, there are different values that don’t meet the human eye. You might be scouring the internet, choosing low season dates, opting for flexible travel dates, adding stopovers or checking different websites. However, to help you understand the airline ticket pricing, you need to understand it from the airlines’ point of view.

How is Airfare calculated?

To simply help you understand how fair is calculated – The air ticket fare calculation is based on the fare of the distance of your boarding and destination and the demand for flights on a particular route.

Read further to know in detail about how the airfare ticket calculation is done exactly.

What all is included in your Airfare?

Your final ticket price is made up of the following things:

Base Fare: Basic fare to commute from point A to point B.
Taxes and Airport Fees.
Fuel Surcharge: Additional fuel charge in case of a surge.
Service Fee To Issue: Fee collected for service provided.
Food: Whether inflight meal is included in the price.
Seat Selection: Pay to select your preferred seat.
Baggage: Pay for your extra baggage.

The top three are mandatorily added to the ticket price. While the last four are optional and paid for only when you opt for them. Some airlines do provide complimentary meals onboard.

How is Airfare calculated according to the Booking Class:

Boarding pass of Qatar Airways
Image Credit: BestPhotoPlus

Airlines have 3 travel classes: First Class, Premium Economy and Economy. Further, these travel classes are divided into booking classes which refer to the type of ticket. The type of ticket in the booking classes is based on the refund policy, cost of changing and other factors. Seats of each booking class are divided into different fare buckets. e.g. There might be 100 seats in Economy, so each fare bucket might have 10-20 seats.

The reason behind different booking classes and fare buckets is profit maximisation. Airlines take into consideration the flying patterns of leisure travellers and business travellers. Leisure travellers book their tickets way in advance and are flexible with dates, which helps them buy cheaper tickets. On the other hand business travellers have a set date they need to fly on and make spontaneous last-minute bookings. Hence they are also willing to make bookings at any given cost. As the departure date arrives closer, airlines don’t lower their prices but in fact, they get more expensive. E.g., airlines will have more profit by selling 50% of the tickets at the base price and the prices gradually increase as each fare bucket gets full rather than selling 85% of the flight at the base price.

However, in the very end, when all the tickets haven’t been sold out, airlines open them up at discounted prices to at least recover the basic flight cost.

How does Airline Pricing work?

The main factor determining airline pricing is seat availability and demand. If the number of seats available on a particular route is less, prices will be higher and vice-versa. Holiday seasons or school breaks see higher demand making flight tickets expensive.

How is Airfare calculated in India?

The total airfare is decided by an algorithm that takes into account past bookings, flight capacity, demand on the route, operational cost and competition. Internationally, the International Air Transport Association (IATA) is responsible for setting and maintaining standards for airlines globally. Airline ticket pricing also heavily depends on the IATA fare calculation.

Tips to save on your Flight Bookings:

Keep track of your flights. Look up apps and websites that give the best deals on flight bookings. For instance., Akbartravels.com provides deals like SWADES (Tuesday domestic flight discounts up to Rs.5000), PARDES (Thursday international flight discounts up to Rs.20,000) and Zero Convenience Fee offer (no service charges applicable) on Wednesdays.
Keep your days flexible. While planning your vacation, zero in on a particular month or so and then check for dates with the lowest prices.
Be flexible with your destination options if going on a vacation. A flight to Dubai might cost you more than a flight to Bali if booking at the last minute or during peak season.
Consider options of flights from all companies and nearby airports also.
Avoid flying from Friday through Monday and opt for flights leaving between 11 PM to 5 AM.

Keep these tips and tricks in mind next time you book a flight to anywhere in the world. Along with flights, make sure you are clear about the visa requirements of the destination, as well as, book your accommodation in advance.

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