Recently I have been trying to find some cheap tickets so that I could get my girlfriend to get to North Carolina to visit me around Christmas. My plans had surprisingly opened up and I realized I might have an opportunity to see her. Sadly, after several hours of researching, I saw the effects of supply and demand. With high demand for holiday travel, any last-minute travel around the holidays costs an arm and a leg. The cheapest tickets I found in the following days cost 729 dollars for a round-trip ticket for one person. The cheapest trip possible would be far more expensive than if it were taken on a different month, and it requires 2 stops with long layovers. If I were to book a trip just a few months from now the price average for a round trip ticket with only 1 stop is around 280 dollars.
Early on, companies will overbook their flights and sell tickets at a reasonable price. If people buy tickets last minute, all the seats on the flight are already sold out, but the company will still sell more tickets at inflated prices. The increase in profit from those willing to pay 4 times the cost of the average ticket allows the company to overcome the risks of an overbooked flight. In the worst-case scenario, everybody shows up and the airline must pay the average cost for one ticket, but in the best-case scenario, some people do not show up for their flight, and the airline profits from all their seats while gaining 4 times their profit for those that booked last minute. Although this is frustrating to see such high prices for tickets, it is better than the alternative of simply not being able to buy any tickets while the flights are overbooked despite the possibility of a seat opening up. And the profit the airline gains then subsidizes other factors of costs within the company so that it way grow and provide cheaper seats and better services for customers in the future. Often traveling feels frustrating, however, these common business strategies do provide for better customer experiences in the long run.
