Posted on August 23, 2010 by Fiona Hilliard

The days of last minute car hire bargains are well and truly over.  New research carried out by a leading Japanese economist has found that the cheapest time to book your airline ticket, hotel or car hire is EIGHT weeks before travelling.

Makoto Watanabe’s ‘eight-week theory’ can be traced to his work published in the most recent edition of the Economic Journal.  Watanabe and his colleague Marc Möller presented their findings in equations such as ∏A = gUG + min(k – g, (1 – g)(1 – r)), as part of a tricky formula where ∏ represents profit.

Scratching your head?  Let’s break it down…

Basically when consumers book their flights a few weeks in advance, they have to allow for the possibility of unforeseen events which may lead to cancellation.  To ensure that consumers take their chances, travel companies must offer advance purchase discounts.  Understandably, ticket prices increase as the travel date draws closer.

Watanabe and Möller’s formula isn’t all pie in the sky either…

A study on flight tickets carried out in 2001 found postponing a ticket purchase by even one day increased the total price by around 0.1% of the average fare. Meanwhile, a separate study carried out in 2004 found flights increase by 12.7% in the final 22 days before departure.

The Eight Week Rule

Prices for an EasyJet flight booked in advance of 21 August
London Stansted (STN) to Munich (MUC)

1 week = £98.99 (€122)

2 weeks = £62.99 (€78)

8 weeks = £19.99 (€25)

12 weeks = £25.99 (€32)