I think the most important thing is that they can't just devalue their product. It may not make sense on this flight, but in the aggregate, if they keep the fares higher, people will pay them because they know that's what it costs to go. If people know that they will be rock bottom close to departure, or even just, "cheaper", there might be quite a lot customers in large groups that would wait until the last minute where they otherwise would have paid the higher fare in advance.