Friday, August 17, 2007

Saving Money on Transport

On some train journeys, ticket prices, can vary from between £20 and £200. Train and airline companies take advantage of people's different willingness to pay and set different prices to maximise their profit. It is known as price discrimination and basically involves charging higher prices to groups of consumers they feel are willing to pay higher prices.

Ways to save Money When traveling

1. Buy in Advance.

Many train tickets are cheaper when buying in advance. This is because people who buy last minute, usually have few alternatives, therefore they are willing to pay higher prices. The pricing of airline flights can be more complicated, it depends on how many seats remain unsold. However, as a general rule, buying in advance offers a greater choice of competitive price. Train companies in particular have many special offers available for buying in advance.

2. Time of Travel.

If you are able to switch your date of travel by a few dates, airline prices can vary by upto £100. On the most popular days, e.g. start of school holidays, demand is much more inelastic. Traveling a day earlier or later often means prices can be significantly lower. Therefore, if at all possible be flexible in your days of travel; it can enable significant savings. Similarly if you are willing to travel at unsociable times, e.g. flying at 6am in the morning prices are often cheaper because, for some reason, people are more reluctant to get up at that time. It depends whether you feel getting up at 4am in the morning is worth a £50 saving.

3. The loyal traveler.

The greatest savings can occur through taking advantage of loyalty schemes. If you travel regularly make sure you take advantage of any air miles on offer. Even if you are traveling a certain route for a limited time, like a week or month, getting a travel card will probably save a lot of money. Train and airline companies take advantage of the infrequent traveler, charging him a much higher price than regular travelers.

4. Unpopular Airports.

If you can avoid the most popular airports like Heathrow and Gatwick you will find that prices are generally lower. As an additional benefit you will avoid the stress of passing through the most congested airport in the world.

5. Take your own food.

When you get on a train or aeroplane, you are immediately in the hands of a monopolist. If you want to eat or drink, you have no alternative but to pay the prices of the train / airline company. This is how they can get away with charging £5, for a slim cheese sandwich. If you are not careful, you can easily spend £10-£20 on food that is unnecessarily expensive. These are the hidden costs of traveling and often the most profitable branch of business for train companies. Be prepared and take your own food. It is not difficult to make it more palatable.

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