Airlines need to make money, and there’s a lot of competition and pressure to lower prices.
So what do they do if they have a flight with, say, 200 seats?
Try to sell 200 tickets? That’s a good start, but if you do that you quickly discover that there are almost *always* empty seats. There will be last-minute no-shows and cancellations and so on, so even if you sold 200 tickets you might end up flying with only 190 passengers.
But if you end up flying with 10 empty seats then why not try to sell an additional 10 tickets? That would make you more money, and if forced by pressure from the competition, you can now afford to drop your prices.
Sure, sometimes too many people actually show up and then you need to bump someone and compensate them. But if that happens rarely enough, it’s still a net win for your airline.
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