The Difference Between Finding a Cheap Domestic versus a Cheap International Airfare

While US domestic airfare is a lot more volatile (i.e. prices change a lot more frequently) the price difference between major travel sites such as Orbitz, Travelocity, Expedia, and the airlines sites is often no more than 10-20%. Sellers of domestic airfare pretty much fall into 2 categories: (1) the airlines and (2) online travel agencies. There are a few niche players but they service a very small market. Therefore, when shopping for domestic airfare deals the “when to buy” is commonly more important than the “where to buy.”

The opposite is true when securing an international airfare bargain. The “when to buy” is still important (as in don’t wait until the last minute) but the “where to buy” is a lot more important. This is because airfare to Europe, Asia, Africa, and South & Central America are somewhat less volatile (may not change as frequently) but the price difference between different vendors can sometimes be as much as 50% or more. There are several reasons why that is but the two major reasons are (1) the type of fares that are offered and (2) the number of players in the field.

The Type of Fares

Without getting very technical there are basically 2 types of international airfare; published and unpublished. In the domestic market 97% of leisure fares are published (give or take). A published fare you can refer to as a retail fare. The airline creates the fare and the rules associated with that fare and then publishes the information through a clearing house called ATPCo (Airline Tariff Publishing Company). ATPCo then distributes the fare to the global distribution systems. Online and offline travel agencies in turn retrieve these published fares via one or more of these systems. Everybody has access to the fare. An unpublished fare (also referred to as a negotiated fare) is still being released via ATPCo but part of the “fare rules” is an indicator of what seller is allowed to access and sell the fare. It is essentially a private fare. One other difference is that published fares have to be sold at the price determined by the airline (no mark-ups or mark downs) while a private fare can be marked up. That is why you see online and offline agencies add a service charge of anywhere between $5 and $50 to a published fare ticket. With a negotiated fare the airline will receive a set amount and the seller is allowed to mark up (add his/her margin) to that fare. So, a seller may negotiate a $300 fare from New York to London with airline X and then mark it up and sell it for $345. Another visible difference between a negotiated and a published fare is the fact that on many (almost all) negotiated airline tickets you will not see the actual price you paid for the ticket. Instead you will either see a much higher fare or only tax information. A published fare tickets will show exactly what you paid for the ticket (excluding any service charges). As a general rule, negotiated fare tickets are frequently cheaper than published fare tickets (There are instances when an airline may have a “fire sale” that undercuts the fare levels of negotiated fares) and that is why “the where” is more important than “the when” when it comes to buying international airfare.

Sellers of Travel

Sellers of international airfare fall into the following major categories:

(1) Major Airlines

(2) Charter Airlines

(3) Online Travel Agencies

(4) Offline Travel Agencies

(5) Global Consolidators that sell to the Public

(6) Global Consolidators that do not sell to Public

(7) Ethnic Consolidators or Destination Specialists

(8) Student Travel Consolidators

(9) Tour Operators

Major Airlines

These are the carriers we are all familiar with such as American Airlines, United Airlines, Delta Airlines, Northwest Airlines, Lufthansa, British Airways, KLM and many more. They offer airfare via their own website and many of the other sellers listed above. They may offer web specials on their own site. They do not charge a service fee.

Charter Airlines

In Europe this type of airline is a lot more common than in the US. A charter is basically when a tour operator “rents” or “charters” an airplane to fly vacationers from their departure gateway airport to the destination airport. There are a few airline companies that offer service from/to the US that have their roots in the charter business. They regularly offer year round or seasonal service to/from a few select US airports to a single country. They are FAA approved and must meet all airline safety rules & regulations. What sets them apart is their business model that allows them to commonly sell seats cheaper than the majors. Some of these alternative airlines are LTU, Condor, FlyGlobespan, or Martinair to name a few. They usually also do not charge a service fee.

Online Travel Agencies

Players in this category are Travelocity, Orbitz, Cheaptickets, Expedia, Priceline, Hotwire and so on. They sell published and unpublished airfare. They charge a service fee. They also habitually try to sell you other travel components such as hotel accommodation, car rentals, attraction tickets and/or travel insurance. If you are going overseas for a vacation buying a package (where the seller will bundle an air component with one or more land components) can be an option and may save you money. In a future article I will cover the advantages and disadvantages of packages.

Offline Travel Agencies

Also referred to as brick and mortar travel agencies, these are the traditional agencies that you would walk into, sit down and book your travel. Depending on size and target market they may also double as an ethnic consolidator or destination specialist. They also have access to consolidator fares not offered directly to the general public. Brick and mortar agencies almost always charge a service fee.

Global Consolidators that Sell Directly to the Public

Many times these are travel agencies that have decided to “cut out the middleman” and go directly to the airlines to negotiate their own private fares. This allows them to then re-sell them at a lower price without losing their margin. In order to get decent private fares a global consolidator would have to offer $100 Million+ in annual agency sales. Most of the negotiated tickets are sold without a service fee. If a consolidator sells a published fare they regularly add a service fee.

Global Consolidators that do not Sell Directly to the Public

In the days prior to online internet travel very few agencies would act as their own consolidator. Instead they worked through middlemen (consolidators) that negotiated deals with the airlines. A consolidator would negotiate that same $300 deal mentioned above, add his margin and then sell it to a retail agency. The retail agent would then add her margin and sell it to the public. As the Internet took shape, agencies could reach a much larger audience and therefore gained the clout to negotiate directly with the airlines. Nevertheless, there are still many agencies, offline and online that offer middlemen consolidator airfares. Due to the sheer volume consolidators can offer to an airline these fares could still be a bargain even after several mark-ups.

Ethnic Consolidators or Destination Specialists

These are probably one of the least known (by the general public that is) sources for inexpensive airline tickets. They are also some of the hardest to find. The US is a nation of immigrants and ethnic consolidators have traditionally serviced their ex-patriot or immigrant community. They were and still are the cheap sources for airfare back to the home country. Unlike global consolidators that can turn over $250 Million+ in sales a year these ethnic outlets may only turn over $2-5 Million a year but most of that can go to 1 or 2 carriers. They are highly specialized and have long-standing relationships to their preferred carriers. These long-term, reliable relationships are the reason why some ethnic mom and pop operations are able to secure airfare rates that are 20-30% lower than any of the online mega agencies. Destination specialists are similar to ethnic consolidators in terms of size and style. They have become true experts in a country or region and have built relationships. The difference is that often they are targeting the foreign independent traveler (FIT). Like I mentioned, the airfare bargains some of these outlets can offer are often hard to beat but the challenge is finding them. Google and Yahoo and any of the other search engines often do not find them.

Student Travel Consolidators

As the name suggests these are agencies that target students (and in some cases faculty). Just like a global consolidator, they approach the airlines and negotiate special discounts or private fares. The difference is that according to the agreement with the airlines they are only allowed to sell to bona fide students (and faculty) only. Frequently, the students have to be enrolled in an accredited college or university and high school students are not eligible. The same is true for faculty. Some agencies are better than others in ensuring that the person buying the ticket actually is a student.

Tour Operators

Tour Operators are entities that sell vacation packages such as all-inclusive, etc. They negotiate deals with airlines, hotels, ground operators and so forth, package them together, mark them up and then sell them as one product to the public. On occasion they will sell just the airfare (at rock bottom prices) in order to fill empty seats on the plane. Since they have a fixed price that they have to pay the aircraft operator, any empty seat is a missed opportunity. The best chance to get one of these cheap seats is usually to the Caribbean or Mexico.

Sources for international airfare bargains are plentiful. Finding the right one at the right time may make all the difference in whether you get a good fare or a great deal. While getting a domestic airfare deal is often the result of (lucky) timing getting a great international deal is frequently the result of knowing where to look.