I know this is about B9, but I think its an educational post that is an excerpt from a
NY Metro article .
"For any particular route, JetBlue uses just four primary inputs to determine its fares-the length of a flight; the number of seats on the aircraft; the estimated cost per available seat per mile, or ASM; and the anticipated "load factor," or percentage of seats sold on the plane. To show me how it works, JetBlue’s vice-president of route planning, Dave Ulmer, walked me through a route that the airline is considering adding.
"Using a flight length of 1,391 miles, Ulmer entered in the 156 seats on the airline’s A320 aircraft. That gave him 216,996 ASMs for the flight. Multiply that by JetBlue’s projected cost per ASM of 7.13 cents (the second quarter ASM was 6.62, but Ulmer added 51 cents to adjust for fuel-price increases), and you get a cost of $15,472 per flight. He then made a conservative estimate of a load factor of 82.05 percent-JetBlue’s first-half load factor was 86.8 percent-and got an average of 128 passengers per flight. Divide the $15,472 cost by 128 passengers, add JetBlue’s target operating margin of 10 percent and a 7.5 percent excise tax, and the average fare comes out to $143 each way. That’s a mere $10 or so over the airline’s JFK-to-Florida fare structure.
"To achieve that average fare, JetBlue then made a few assumptions about how people will buy tickets for the flights. In this case, the airline assumed that 75 percent would be split equally between fare sales, fourteen-day advance ticketing, and seven-day advance. The remainder would be split 15 percent for three-day advance purchases and 10 percent walk-up. The proposed price structure rewards people who buy early without overly taxing the last-minute buyers as much as most airlines do: Fares range from an $84 sale price to a maximum of $269 for walk-up purchases."