Let’s say for example I live in Los Angeles and a United airlines flight from LAX to JFK with a layover in DFW is $500 but that same flight from LAX to DFW is $600. How did I save $100 by adding an extra flight?
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Because the airlines care about marginal cost. The two primary forms of airline travelers are businessmen and tourists. Tourists want to save time and businessmen aren’t paying their own ticket. Those groups don’t care if it costs more and will always fill the direct flights. But there will still be flights that aren’t getting filled. By accepting a layover, you fill two or more flights that were likely low demand flights and would not have been filled by those other two forms of travelers.
Now the airlines calculates the cost of you flying. Just the cost of one additional passenger is a very low almost nonexistent cost if that flight would not have elsewise been filled. And so they offer it cheaper hoping it will be filled by those who don’t mind, leaving room on higher demand direct flights.
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