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Even the experts agree: it's not easy to snag a good airfare these days. Sure, there are lots of airfares out there, and you can find them on the Web, but how can you ever really know whether you're getting the best fare available? To answer that question, THAT MONEY SHOW asked the expert Bill McGee, Editor of CONSUMER REPORTS TRAVEL LETTER, to explain this confusing situation and share some tips on how the system works.

According to McGee, "The average consumer never knows what a good fare is. There is just no yardstick. When you are buying a car, you can more or less know what a good price is. When you are buying an airline ticket, you are on your own." It wasn't always this way. Before 1978, the airline industry was heavily regulated, and the government set standardized fares, and determined each airline's routes, schedules, and even what type of aircraft they could use.

McGee continues, "Airline pricing started to get very complex after 1978 when the airline industry was deregulated. Prior to that the government set fares. In the era of deregulation, over the last 20 years or so, there's been a lot of flux. One of the things that has never settled is a rational pricing system for the airline industry. We are still waiting for it."

Even without a standardized pricing structure, passengers are, for the most part, paying less for airfare now than they were before deregulation. According to the Air Transport Association, it cost less to fly in 1999 than it did in 1978 (adjusting for inflation). Though prices may be lower in this deregulated era, the tradeoff has been confusion when it comes to airfares. "One of the policies that airlines have for their own employees is to never discuss airfares while onboard a plane. And the reason for that is that on an average 747 carrying 400 passengers, it is theoretically possible that there are 400 different fares. It's the most confusing and complex pricing system in existence in any industry," said McGee.

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In order to see for ourselves whether airfares are really as complicated as all that, we headed out to Newark Airport to talk to coach passengers travelling on a midweek afternoon flight to sunny Fort Lauderdale, Florida, on Continental Airlines. We polled a number of passengers and were forced to conclude that their fares were indeed different, sometimes surprisingly so.

"If you are travelling and you have some flexibility, you can benefit from the pricing structure. It really all depends on just how flexible you are. If you are able to leave early in the morning, or travel late at night, you certainly are going to get lower fares. If you stay over a Saturday night, you'll get lower fares. If you booked in advance, you'll receive lower fares. It's really up to you," concluded McGee.

According to McGee, "Certain passengers subsidize others. For the most part there are more leisure travelers than business travellers. But the yields, the profits that the airlines derive, come from the business travelers, those who walk up and buy fares at the last minute."

So, what's our advice for getting the lowest fare?

  • Shop around. Don't be too eager to jump at the first ticket you find.
  • Try altering your arrival and departure dates slightly to see if you can get a lower fare.
  • Try staying over for a Saturday night. You can have a mini-vacation, and save some cash.
  • Book well in advance. Though this doesn't always guarantee the cheapest fare, it often does help.
  • Consider flying early in the morning or late at night to get some extra savings.
  • Use Internet search services that allow consumers to search seats on flights of competing airlines and compare the fares. If you're not online, call several airlines and talk to the salespeople about times or days for travel that will give you better rates.

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