What Is a Budget Fare?

K. Kinsella

The term budget fare is commonly used to refer to low cost travel tickets. People in the United Kingdom, Australia, and other English speaking nations often use the word fare when referring to the price paid to travel, whereas in the United States, the word is usually only applied to airline tickets. Precise definitions of budget fares vary, but the term can be used to describe any travel ticket that is bought at a below average price.

Some airlines offer budget fares.
Some airlines offer budget fares.

Certain times of the year, such as the summer months and time periods around major holidays, are referred to as the high season by travel firms. During the high season, tickets prices are usually more expensive than normal. The opposite situation occurs during the low season when people tend to travel less. Many travel firms attempt to attract more clients during the low season by reducing the cost of tickets.

Budget fares may be available only for a limited time near a flight's scheduled departure time.
Budget fares may be available only for a limited time near a flight's scheduled departure time.

People on limited budgets often take advantage of budget fare promotions during the low season because such deals enable travelers to visit destinations that may be beyond their financial means during the other months of the year. Budget fare airlines sometimes agree on subsidies with municipalities and national governments, which enable the airline to sell tickets at a reduced cost. Governments recoup the upfront cost of these subsidies through taxes that are assessed on hotel rooms, food, and merchandise. In other instances, local businesses subsidize the budget flights, and these firms recoup this cost through revenue generated from the tourists that the flights bring to the area.

Train, bus, and coach operators sometimes offer budget fare deals to students, senior citizens, and children. Such deals are designed to generate good will for the transportation company and generate more revenue because family members of the people paying discounted prices may have to pay regularly priced fares. As with airlines, train and bus operators tend to offer budget fare deals during times of the year when ticket sales are slow.

Many travel companies specialize in budget or low cost travel, and these firms often charter planes to take groups of tourists to specific destinations. Budget travel firms often create vacation packages that include transportation, accommodation, and meals, and these trips are catered towards people who have minimal traveling experience and people who do not have the time or the desire to plan each aspect of their trip. In order to generate a profit but keep prices sufficiently low to entice clients, low cost travel firms usually negotiate budget fares for transportation.

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