Originally Posted by JRF
The goal should be to lower the price only to the level that results in the flight selling out. Not lowering the price as low as possible resulting in the flight selling out and loosing money. With your theory, DL should fly 747s.
Delta does not set the price in the PHL market. US used to, but now Southwest is the one that sets the price.
If the market price goes down, quantity demanded goes up. If Delta doesn't supply more seats, they will sell out (sell out too soon to be exact).
Originally posted by TransWorldOne:
Not necessarily. Delta can offer low prices, but not allocate inventory to be sold at those low prices. Delta has yield management systems in place for this purpose.
It's the same thing but on a smaller scale. Adding capacity (if it's easily available, which it is) means Delta won't constantly run out of seats in the T, U, ... booking classes.