wsuffa
Touchdown! Greaser!
I've often wondered how the price structure actually does work. I book flights to Belgium and Paris frequently for my mom (she hasn't learned how to use Delta.com yet and probably never will). So it's the same route over all different types of year. I can't make any rhyme or reason of how much it costs and why it fluctuates as much as it does. I'm also not in tune with all the factors. It seems to me like it shouldn't be cheap - that's a long trip. But I've seen it vary from $500 to $2000 for the same flight on the same airline. Now I realize that's a lot different than domestic flights that people might be more in tune with, but I admittedly don't know why that goes on (other than the obvious supply/demand). Doubly so when fares go up $100 or more over the 30-minute period when my mom is being indecisive trying to save $10 on a ticket that she's now paying an extra $50 for. Maybe they know I'm looking at tickets for her.
So my point - obviously everyone will notice the extra $100, and they might notice the extra $10 on cheaper domestic flights, but would the average consumer really notice a $10 price change across an airline?
I don't know, that's why I'm asking.
The airlines (in general) use a system called "yield management" that tries to extract the maximum amount of revenue from the seats in the plane. Part of the equation is how many seats are sold (and to whom), part is "route management" - which will sell you tickets to Brussels for less than the same flight to JFK will cost on it's own, part is the pricing and assumed load/yield of competitors. There is also some historic pricing built in - like the assumption that demand is higher in summer than winter. And special events factor in, too, meaning that pricing to the Super Bowl (er, "Big Game") will be higher than normal.
Each employs the methods in different ways. Delta, for example, will often have moderate fares up until about 3 weeks before flight time, reduce them a bit for 2 weeks, then raise them again within 7 days of travel. Saturday night stays factor in for international travel. Southwest starts low and gradually rises: it is usually cheaper during the last week before travel, but can be higher other times.
The goal would be to create demand that fills one seat less than full. Why? Because if you sell out, you've asked too little for the seats and left money on the table... but if you have a lot of empty seats, you've priced too high and left money on the table (from empty seats).
Unpredictability is part of the equation, too, to try and keep "business travelers" from learning the pattern and booking close-in at the cheapest price. (That assumption really is limited in value these days: I'm pricing a Jan. flight to Denver: refundable tickets are $1500 RT while NR seats are $500 RT w/a $150 change fee if we need to change it. Even if I went one way on this ticket and threw away the return (while buying a full-fare ticket for the return), I'm ahead of the game. Most companies require NR tickets these days.
And yes, it really is treated as a commodity these days.