Beware Airfare Pundits Bearing Statistics

George Hobica, March 19, 2009
Fares from Washington DC:

    Mark Twain famously wrote that "There are three kinds of lies: lies, damned lies, and statistics." Some of our best friends are statisticians, and Airfarewatchdog.com is not against statistics. But we don't quite understand the math used by many of our colleagues in the airfare punditry business when it comes to reporting on the ups and downs of airfares.



    We've seen the same media mentions you have: X number of airfare increases, X number of decreases; fares went down 50%; fares went up $10; the fare on such and such a route is down $50 from last month or last year.

    But what do these figures really mean? For example, if Continental's lowest fare from Houston to Los Angeles goes down from $298 round-trip to $208 round-trip, does that mean that the average fare sold by Continental and all of its travel agency partners on that route decreased by $90? Not necessarily. If Continental only offers and sells one seat at the newly lowered fare, but every other fare they sell goes for $398 round-trip, then the average fare sold is much higher. True, the lowest published fare went "down" but that doesn't help the majority of consumers who paid more.

    In order to determine what consumers actually paid for their flights, the best sources are large online travel agencies that actually sell tickets, such as Expedia, Orbitz, and Travelocity. We airfare pundits merely track and monitor published (not sold) fares using pretty much the same two fare listing sources: ATPCO (the Airline Tariff Publishing Company) and ITASoftware. Interestingly, despite the steady stream of reported airfare price increase attempts and fare decreases over the last year, Expedia, Inc., in its latest quarterly financial statement, reports that revenue per air ticket sold decreased by 4% in Q4 2008 compared to Q4 2007. That statistic, based on ticket sales over a wide range of routes and fare types, seems like a more reliable indicator than anything we can think of.

    "Sold vs. 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."

    Another good source would be the airlines themselves, if you could get them to divulge how many seats they sold at what prices on what routes during various time periods. But good luck with that. 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."

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