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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Travel Agent here
Tl;dr if everyone tries to buy the cheapest ticket then first ticket sold is cheapest, last ticket on a plane is the most expensive. Some people choose to book a more expensive ticket right away so it’s not a hard rule.
The airlines are a bit hush about their exact algorithms but basically the way they work is based on having a whole bunch of different fare levels/bands.
If you have an empty plane and it is very far from travel (prices tend to be released 10 months in advance or so of the flight) then you can get the cheapest fare band available and some level of early bird discount may be involved as well.
There might be 10-50 or however many seats available at that lowest fare on that particular flight before it sells out and only the next cheapest seats are now available. Depends on the airline and how big the plane is etc.
As departure gets even closer more fares may disappear even if they haven’t been sold, leaving slightly more expensive tickets as the baseline.
This happens in quite a consistent way, as a travel agent we can see (if we care to research it) when certain fares will expire ie. when the prices will jump up for a certain flight.
It might be the same fare band available but because you missed booking by a certain date you are now buying class X(-10%) instead of X(-20%) that was available yesterday.
If all the X-20% fares had already sold out then you would have moved up to X-10% anyway based on availability. So it is time and availability that affect prices.
This is also why we refer to them as fare bands because within a band there is certain movement and availability, it’s not all just the one price. Buy that band will generally share the same change/cancel fees etc.
Combining these things you have flights that sell out early where the most expensive seat sold is a certain price. However if that final seat doesn’t get sold untill right before departure it can be even more expensive again because the fare bands are restricted as the flight approaches on top of the fact that there aren’t many tickets available so you are buying the creme de la creme.
Lower fare bands (and discounted tickets) will generally have higher change and cancel fees. The final seats although being the most expensive will generally allow free changes (airlines charge fare difference + change fee but with an expensive ticket you probably won’t need to pay fare difference due to the high fare you have paid already and also might have $0 change fee)
This all applies per cabin as well but you can also think of premium economy and business/first class as just being higher and higher fare bands that come with bigger seats and more inclusions instead of just better change fees.
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