Think about the last time you flew off on holiday. How did you decide which flights to take? Buying a plane ticket online can be as simple as clicking a button – but there are things you should consider before you do.
What is most important to you when holidaying? Is it getting to your destination quickly, finding the cheapest airfare or receiving fabulous service? Finding airfares online is easy when the process is simplified by aggregator sites that remove many of the decisions involved.
Viewing a range of options ordered by price gives us the opportunity to simply trust in the algorithm and select the recommended flight, an approach known as taking the path of least resistance. But comparing flights only on price so we can fit within our pre-decided flight budget isn’t necessarily the best approach.
Behavioural economists refer to our tendency to pre-allocate amounts of money to specific spending categories, such as flights, as mental accounting. When people apply mental accounting, they dedicate an amount of money to a specific purpose and then will not spend that money on anything else.
Budgeting for the best bits
While the approach can be a good one – it keeps us organised and can help visualise how we are managing our spending – it can also mean that we don’t use our money in the best way.
For example, we might accept long lay-overs and lost sleep to select a cheaper flight, even if we would increase the overall enjoyment of our holiday by paying more for flights without long waiting times and spending less on expensive restaurants once we arrive.
Reducing the rigidity with which we apply mental accounting means we can allocate our total budget to what is most important to us, rather than being restricted to spending pre-determined amounts on specific categories.
Remember that regardless of its intended use, money is all the same. Allocate your holiday budget according to the most valuable parts of your experience.
Stuck in the middle
The prices of flights can change frequently and there is no easy way to know exactly how much your flight should cost. When making decisions that involve comparisons, we tend to prefer the middle option: the “safe” choice in between the extremes. It’s known as the compromise effect, or extremeness aversion.
Previous studies have shown that when products are generally comparable, such as cameras, or plane tickets, if a third option is added to the two original choices, our tendency to select the middle option increases.
When choosing our flights, for example, we may never have considered paying for premium economy tickets, but compared to the relatively expensive business class and the cheaper economy tickets, premium economy can seem like a reasonable choice.
Plumping for the middle option can be useful by making us feel comfortable that we are getting a relatively good deal compared to the alternatives, but it can also be distracting if it encourages us to increase our spending.
Price of your loyalty
It may be useful to rethink how much you value of the benefits of customer loyalty. Does it really suit you best to stick with just one airline? When we regularly fly with the same carrier we might be rewarded for our loyalty by earning status points. These can be traded for benefits, including upgrades, or superior services, such as priority boarding or lounge access.
Once we have earned these benefits, we may be tempted to only view flight options with this carrier and may pay more to ensure we only fly with them. But why?
Possessing the right to loyalty perks can lead us to value them more highly than someone who doesn’t have them. Aligned with what behavioural economists call the endowment effect, we have a tendency to value things we own more than those we don’t. Our access to selected seating, priority boarding and secluded lounges can seem more valuable than they really are, simply because they are ours and not someone else’s.
This is not the only reason we may be happy to pay more for a flight with our loyal airline, though.
The fear of losing our status, by flying with that airline less often, can keep us coming back to the same provider. Even if they only offer more expensive options or inconvenient routes. Based on the theory of loss aversion, the possibility of having our fast check-in and free seat selection taken away from us can be a strong motivator to stay with one airline.
So when dreaming up your next getaway, don’t just consider the ready-ordered choices delivered by your online flight comparison site. Remember it might pay to take a step back and consider where you want to allocate your holiday budget, whether you are simply choosing the middle flight option and whether you are swayed by the perks of loyalty. They all play a role in whether we find great flights.