web Musings of The Global Traveller

Tuesday, September 08, 2009

Taking advantage lower fares in other countries

One tip to saving money on travel (especially long-distance flying) is to shop around for cheaper starting points. Air fares from some countries can be markedly cheaper than other nearby (or not so nearby) countries, more than making up for any cost of extra positioning flights. It can be the difference between being able to afford business or first class or not, or being able to take an extra trip to travel more often.

For example, in general air fares from New Zealand are much cheaper than from Australia. I know several Australians that buy most of their trans-Tasman tickets from New Zealand, and also longhaul tickets to North America, Asia or Europe. The savings vary but can be 30% or more.

As alluded to above there are some considerations in doing this.

Extra travel time

Depending on the itinerary, starting from a lower fare country may not add any extra time, or add days to the trip. If the main ticket has to be issued in person (as opposed to being ticketed ahead of time) then you may need to add a day (and hotel costs) to allow the ticketing to be completed. This is less of an issue with e-tickets than the previous paper tickets, but can still be relevant in some situations.

If on a tight schedule this can be an issue.

Currency & fare movements

Unless you buy all the tickets at the same time there may be exposure to changes in fares and changes in exchange rates. Last year I booked a trip from Hong Kong with positioning flights on another ticket (I had an airline credit that was about to expire). By the time I was ready to ticket the main part of the trip the exchange rate had moved about 20% (in the wrong direction for me). I ended up ticketing that trip from Seoul and getting another ticket between Hong Kong and Seoul. There have been other instances where the currency &/or fare changes have been in my favour.

Repositioning issues

Having decided to buy air tickets from another country there is a choice in how to get there, in what I called open or closed repositioning.

Closed repositioning is the simplest, but may not be the cheapest or best option. Here a separate ticket to and from the lower cost place is purchased as a nested ticket. For example someone in UK may buy an around the world ticket from Sweden and buy a ticket to and from Sweden on suitable dates before and afterwards. Closed repositioning provides certainty - there is no exposure to a future high cost to return. This works well for infrequent longhaul travellers, for cases where the repositioning flights are relatively costly and where the exchange rate may be very volatile.

Open repositioning is more complex, and provides more options. This is where you buy a one-way ticket to get to the other country. The return is thus left open. The options are:

  • further tickets from the other country
  • routing through your home airport with throw away ticketing
  • at the end reposition to another cheap origin

If you have frequent travel then further tickets from the cheap country makes sense. For example someone based in Australia travelling to New Zealand frequently with known dates for each subsequent trip can keep buying tickets for New Zealand to Australia return with the flight(s) to Australia lining up to return home from one trip and the flight(s) back to New Zealand for the start of the next trip.

For more complicated itineraries the further tickets strategy may be slightly risky because you are exposed to fare increases and exchange rate changes. Some people I know used to book a series of around the world tickets from Cairo but then found the fares increased substantially.

Throw away ticketing is where you do not fly all the flights you have been booked on. It is commonly used by travellers to save money. The trick is to route your itinerary to pass through your home (or other convenient) airport near the end of the ticket and skip the last flight(s). Since you have not shown up for travel on a leg, the rest of the ticket is then invalid and cancelled. There is a risk with this approach, in that throw away ticketing is normally prohibited by the airline fare rules and/or contract of carriage. If you do this rarely they may not care. Do throw away ticketing too often, though, and they may pursue you for the fare difference between what you paid and the sum of the one way fares (much higher). In some cases this has gone to court, and in Europe at least, generally the traveller has been successful in preventing the airlines from recovering fare difference.

The other option is to be flexible and simply reposition for the next cheap place to buy tickets. Effectively this is what I did between Hong Kong and Seoul (see above). Sometimes the cost is low, and sometimes not. In my case I used an award to reposition because fares were too high.

Cost of repositioning

When deciding to use a cheaper country to buy tickets it is important to factor in the cost of repositioning. Even if repositioning flights are done using frequent flyer awards or airline credits there is still an opportunity cost in that the miles or credits could have been used for something else.

For closed repositioning the extra costs are known in advance. For open repositioning the extra costs can only be estimated.

Some frequent flyer programs are better than others for repositioning. The good ones are those with cheap one-way awards.

Enough already, where can I buy cheaper air fares?

Since fares and exchange rates vary all the time it is impossible to give a precise answer. However there are some general trends.

The biggest savings are on business and first class fares.

In the how to get to series of posts I give tips on countries with generally cheap short or longhaul fares compared with other nearby countries.

The alliance forums on FlyerTalk have useful information on the latest cheap countries to buy around the world tickets (these change all the time).

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