I think we agree on the general theory; where we differ is our views on the quantum involved.

If it were widely known that airfares drop at the last minute, then you could be reasonably sure that you'd get a flight to wherever you wanted to go because everyone else is waiting to do the same thing. And if you didn't get the 10am flight you could always get the 1pm or the 4pm flight, let's say. I suppose the theory breaks down when, by extension, the system backs up with everyone trying to outsmart everyone else.

As far as the quantum goes, I think a fair number of people are willing to travel 'last minute'. The success of the discount airline industry in Europe is proof of this.

I take your point that families would still plan their holidays in advance (and I agree with you points on work, etc), but I'm confident many people would take a more dynamic approach to planning.