Is there solid justification? It’s annoying that it can’t be a solid rate unless some kind of natural disaster or surge in location specific travel happens. And why does booking months/weeks seem reasonable prices but within a few days it’s astronomical?
In: Economics
Simple answer , Dynamic Demand Pricing systems are used by major airlines to update all fare prices in real+time based on a variety of factors that maximize the airlines bottom line. High seat costs for booking the day of or a day before have been common practice in the airlines even before these systems we used.
Gone are the days of static prices for a particular route or season. Because airlines have a wealth of data at their disposal they use sophisticated models (or have a 3rd party companies that specialize in this business) give them the best rates (sometimes down to the seat on a given Flight) that will maximize their bottom line.
Here’s a simplified example. A common flight from EWR to LAS (Las Vegas) is run through the model that looks at what time of year (is this peak convention time in Vegas?) historical passenger utilization for this flight last year,last month, etc. How many seats sold how many left, how many days before the flight, if it’s not selling fast enough fares get reduced to a break-even amount, and so on… This sets the seat rate,then every , passing minute or so the model updates based on any changes. .
These.systems are slowing being applied to all sorts of Pricing.
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