Airlines set their ticket prices based on a number of different criteria. One of the primary sources the airlines use to set ticket prices is based on the popularity of the destination. For example, you will find the ticket price to Orlando, Florida; will not fluctuate from month to month and or from airline to airline.

It also depends on demand to a certain destination, ticket prices to Europe in the summer will always cost more then then tickets in the winter because it’s high season and people are willing to pay top dollars for that ticket. While travel to Iceland in the winter is minimal, airlines will reduce the price of a ticket as much as possible.

A ticket price also has to do with the competition. If a competing airline offers a price to a popular location like Las Vegas, at a discount rate, the other airlines must match that ticket price, or lose the travelers to that airline. When an airline sets a ticket price based on a competitor’s price of a ticket, the airline then has to adjust and perhaps change the price of the ticket after the current promotion is over in order to meet their profit margins.

It is also required by law that an airline keep a certain amount of sale tickets. According to airline executives, the percentage is 7 to 10 percent of each flight. These fares usually appear online in the mid-night hours, 2-4 am.

There are a lot of variables that are out of the control of the airlines. The price of gas has a major factor in the setting of ticket prices, as well as the estimated amount of travelers to a certain destination. An airline that will fly with at 60% passenger capacity will need to adjust ticket prices to the point that the airline can break even. An airline that is operating at a full capacity of a flight, will often times discount that particular ticket price to achieve close to 100% capacity on that particular flight.

As the airline industry grew, there was a need to make the process of selling, and storing information more efficient. For this the airlines invented the GDS (global distribution system). Today there is five global GDS systems and with each system there is a unique algorithm that calculates ticket prices. It has become so complicated over the years, that no one has a clue how the systems calculate ticket prices and that why it sometimes cost less to fly from New York to Sydney then to fly from New York to Boston.

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Once you learn all the airlines travel terms, you won`t be dependent on your local travel agent anymore, and he/she won`t be able to collect all the wonderful service fees from you for being your traveling interpreter.

The price of your travel flight is based on many intricate components that the airlines reservations department implement, not to purposely confuse you, but to formulate their airfares and determine what they need to charge each passenger for all flights taken.

Now if you already know most of these airlines flight terms, then that`s ok. However, there are many people that are new to traveling, and are now beginning to use online air suppliers to capitalize on the great deals they offer. But when you`re making that reservation, you want to understand why the flight you selected is so cheap, and what are the reasons for the low pricing.

Misunderstanding in Airline Terms can cost you more money!

Most of the airlines service terms you will come across will play a big factor on whether you pay an expensive price for you ticket, or getting the discounted travel deals you`re looking for in the first place. I will explain the most common industry terms that many people get confused about:

Nonstop versus Direct or Through Service: Don`t get this one confused, because many airline companies don`t explain this properly. Nonstop means exactly that, and most travelers want these flights, so they book-up quickly. You fly from your origin and land at your desired destination without any stops in between.

Direct or Through Service: This can get a little confusing to many individuals. The aircraft even though is en route directly to your destination, it may be making some routine stops on the way, and all passengers must remain on the plane at that time. There are many times when you print your ticket that it will not list the cities that it will be landing in, so it is always wise to investigate a little further, and see how long the stop is going to be in each individual city.

Connecting Flight: When you`re on this type of service flight, now this is treated differently than the other services above. With this type of flight the plane travels from one city to another, however, the passengers must change aircrafts at some point between the origin city and the destination city.

On-line Connections: This is when you change an aircraft but continue to fly with the same carrier. So if you`re flying form Los Angeles to New York on American Airlines. If you make a stop for example in Denver, you will change planes at that airport, but with the same American Airline carrier.

Interline Connection: This is when you as a passenger changes airplanes, but instead of boarding the same company plane you will be on a different airline. For this example, you`re flying from Seattle, Washington en route to San Antonio, Texas. If you were on a United flight, you will have a stop in a city in-between your origin and destination, and let say you have to get on an American carrier to continue your journey. The main reason for this is that the particular airline company may not be flying into certain cities due to particular business reasons, so then they share with competing airline business companies.

Open Jaw: No it`s not when you see the price of your ticket and your jaw drops. This trip is one in which you depart out of one city, and later return from another city. For example: you fly from San Diego, California to New York City, and then return back home from the city of Boston back to San Diego. This can dramatically increase your airline ticket, so if you`re looking to visit a family member in another city that you arrived in, and then depart out of another city where your families live, then carefully check and make sure you understand this term.

Consolidators: A consolidator can be your friend if you understand how they work. Simply put, they purchase tickets from an airline at a rate less than the tariff, with the intention of reselling the tickets to either you the public or travel agencies. They buy tickets in bulk from air carrier companies, and therefore offer substantial savings. If you happen to be wondering what a tariff is, it`s basically set pricing, rules, and regulations all put in place by authorized organizations in the airline industry.

Let`s talk types of Fares! If you`re searching for fares online, you will come across a list of different terminologies for your ticket, and it will reflect on the price you end up paying. The airlines distinguish certain fare prices by the terms normal or restricted.

Normal Fares: A normal fare is first class, business class, and economy. These have no restrictions such as advanced reservation requirements or minimum stay stipulations. Such flights are valid for one year from the date of the first flight and can be extended if not used within that period.

Restricted Excursion and Discounted Fares: These have certain restrictions, and that is why they are cheaper to purchase. They`re sold with a number of conditions attached, which most require advanced reservations, and there is normally a minimum and sometimes a maximum stay requirement. Travel dates are pre-determined, and any changes in most cases are subject to a penalty, or at times you can`t make any changes at all! Airlines limit the number of seats at these fares to encourage travelers to book early.

With an understanding how the air travel industry communicates, and how they determine a flight schedule and pricing, you will eventually be able to speak their language, prevent air lingo confusion, and obtain the best flight itinerary and price with this new knowledge!

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