How does the flight ticket price vary so much for the same air ticket depending on when the ticket is booked? Is it justified to charge such a high price from a passenger who books the ticket at the nick of time?
Yes, itu2019s absolutely justified.Airfare is not priced like other consumer goods, but thereu2019s an excellent reason for that. Their inventory is extremely time-sensitive, with an absolutely firm expiration date. (The value of a seat on yesterdayu2019s flight is $0). Furthermore, if they underestimate the demand, they canu2019t stretch the plane a little bit to fit in an additional passenger.Last-minute travel is expensive for two reasons: 1 - because the most price-sensitive travelers, people traveling for leisure, rarely leave the planning to the last minute, and 2 - because if youu2019re in New York, and you need to be in Los Angeles tomorrow, you have to fly, and youu2019re going to pay whatever it takes to get you there.If they were to charge the same price to everyone, it would have to be much higher than most people are used to paying (except last-minute business travelers). In fact, it would be so much higher that theyu2019d have a hard time selling their seatsu2024 so theyu2019d have to raise prices to compensate, since most of the cost for a flight is fixed, regardless of passenger load. Then theyu2019d sell even less tickets, and eventually the airline would go out of business.As for the mechanism u2024 there have been a couple of answers posted that describe part of it, but theyu2019re incomplete, so Iu2019ll try to explain it as thoroughly as I can. (TL;DR: airfare pricing is really complicated).In order to purchase a plane ticket, you need inventory on one or more flights and one or more applicable fares. Inventory is typically described in terms of fare buckets. Excluding special* inventory, hereu2019s the inventory as of this writing for todayu2019s (December 9, 2024. flight UA918 from Washington Dulles (IAD) to London Heathrow (LHR): F1 A1 J6 C6 D6 Z4 P0 Y9 B9 M9 E9 U9 H9 Q9 V9 W9 S9 T9 L9 K9 G0, assuming a US point of purchase. On United, F and A are first class; the values listed for J through P are business class, and Y through G are economy. Within each group, theyu2019re ordered from (generally) most expensive to least. Looking at these numbers, we can see that United is willing to sell one ticket in first class, six in business class, and at least nine in economy class. u201cF1 A1u201d does not mean that there are two seats available u2024 it means that there is one seat available, and it can be purchased with either an A-class or an F-class fare.Note that I said u201cassuming a US point of purchase.u201d Available flight inventory can actually change depending upon where youu2019re purchasing the ticket. If I search for the same flight from the UK, the first and business class inventory is F1 A0 J6 C4 D4 Z0 P0. The A and Z buckets have been zeroed out and the C and D buckets have been reduced.OK, so you may be looking at that and thinking that flights in economy class should be cheap on this flight. If I book this as a one-way flight, the cost is $1619 and it books into B class u2024 the second-most-expensive economy fare class (!). This is where fares come into play. It turns out that on the Washington (WAS) to London (LON) route**, United Airlines doesnu2019t publish any discounted one-way fares. Most leisure travelers donu2019t buy them u2024 youu2019ll typically want to get home after your trip u2024 but business travelers, who often fly complicated itineraries, might. Even though the flight has 9 seats available in all of the classes down to K, you canu2019t buy a one-way ticket from Washington to London for less than that price.So, Iu2019ll update my search to return on December 17. That reduces the outbound flight to U class at a cost of $1304. Why U? Because that is the cheapest fare without an advance purchase requirement. This is how the airlines manage to raise the price on close-in travel in a systematic manner. Looking at the fare table for WAS-LON, the cheapest fares are L-class fares with a 28-day advance purchase. If I change the flight to January 9, 2024 through January 18, 2024. the outbound price drops to $289 in L class.***If I were to wait until January 8 to buy the January 9 ticket, it would be back to $1304u2020.One final point. Airfares are priced based on the total travel, not the specific flights taken. Believe it or not, if I start in Boston, fly through Washington u2024 admittedly, in the wrong direction u2024 and then turn around and fly on that same flight to Londonu2024 the outbound airfare is $1263. In other words, United will charge $40 less to fly them further (!). This often happens because a carrier can charge higher prices if itu2019s the only one that offers nonstop service. United offers nonstop service from Washington to London, but not from Boston to London, so they charge a slight premium for the non-stop flight, and give a discount for the one-stop flight to compete with carriers who do.Iu2019ve only scratched the surface here, but I hope you get an idea of how many different factors go into pricing an airline ticket. :-)PS: To the person who suggested that the airlines needed to be re-regulated due to pricing u2024 after adjusting for inflation, airfares are much, much lower in the US than they were in the regulation era (through 1978). Air travel has gone from an item for the rich to something that is widely accessible across the social spectrum. Yes, service has suffered, but thatu2019s because it turns out that most Americans aren't willing to pay for service; people shop based on the lowest price, so thatu2019s what they get. Donu2019t blame the government for the airlines mistreating you u2024 blame your fellow passengers. :)* Frequent flyer award tickets, frequent flyer upgrade tickets, and the special, highly-restricted Basic Economy bucket which isnu2019t currently applicable on this route and is confusing anyway.** Airfares are published by city, not airport. The fares would be the same for Washington Reagan (DCA) to London City (LCY), assuming somebody flew that route (they donu2019t u2024 at least, not non-stop).*** Because Iu2019m using a round-trip fare, this is actually a half-round-trip price and doesnu2019t have any particular meaning on its own u2024 but it serves as the best comparison to the one-way price I started with.u2024 Assuming UA doesnu2019t publish a new fare between now and then, which is entirely possible, and assuming thereu2019s U-class inventory on the flight at that time.