Assume each airline different, but they clearly track each others’ prices, and certain market dynamics/forces/availability levels seem to cause the algorithms to get derailed into nonsense land. Ex: I am looking at flight from between two cities 1000km apart. a month from now i see $159 dollar flights. looks like average in the 200s. this week, two airlines both show options tuesday and thursday. Airline A, tues nonstop economy: $1500 (lol), B $1300. thursday A: $670, B: $590.There is just no way anyone is buying for 1500 right? are there people out there (that can’t afford private) but hate money so much they are spending 1500 on a one hour flight? or do runaway algorithms actually cost airlines sometimes?
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In the long term you are very elastic. You have tons of options and can take your time picking whatever you’d like, whenever you’d like, however you’d like.
On the other hand though, you are very inelastic in the short term. Say a loved one died or you have an important meeting tomorrow or you need to close some sort of business deal asap.
You wouldn’t care about the price. You’d just want to get to your destination and airlines take advantage of that.
Like another commenter said though, they may lower the price a ton at the very very last minute to get anyone onboard. Because an empty seat is just lost money.
Edit: this is just based on my understanding of PED, and not actual IRL experience.
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