Originally Posted by
yellow77
It's not so hard: anyone needing to go to HKG at 24 hours notice probably needs to go there urgently, and will be willing to pay that fare. This is particularly true since those with urgent personal needs to go to HKG may well use miles to avoid paying that fare, or may buy from a consolidator rather than CO, so that CO.com is only seeing relatively price-insensitive consumers.. Better to sell 1 seat at $2000 than 2 seats at $800 each, or 5 at $300.
The other issue is the dynamic part of pricing. If I knew that last-minute flights would fall to $100 (marginal cost of fuel and meals, whatever it is) whenever CO didn't sell out, then I wouldn't ever buy in advance at $800 if my travel can be easily rescheduled. CO could well be better off committing not to discounting on empty flights right before departure to avoid this kind of strategic purchasing behavior by price-sensitive consumers. The first reason is likely more important than this one.
What is in common here is that the price is not set to maximize the number of seats sold on today's flight, to the exclusion of all else.
But you'll never
know there will be
any seats at the last minute. So, you would not use that strategy, unless you are a casual traveler who will
only go if there's a "good" price. Anybody who has to go to Hong Kong is not going to wait until tonight to buy a ticket for tomorrow. The flights are often full by then! Finally, your example pricing is unrealistic; I'm not suggesting a $300 fare. How about $1200? And if not at the 24 hour mark, how about 6 hours before flight? An empty seat is lost revenue.