Originally Posted by
ozstamps
If a full burn on a transpac is say $50,000 (total guess for argument sake) You'd have to wonder why selling a 100 real deep discount last minute tickets (as priceline does with Hotel rooms) would not make sense if cost of moving those bodies is negligible to the fuel burn. Indeed 100 last minute bodies at $500 pays the TOTAL fuel bill.
The issue here is that the 100 purchasers of the deep discount tickets may well be those who wanted to travel anyway and would have paid the higher price. But if they know with reasonable certainty that there will be cheap last minute tickets they will hold out for that, and the airline will lose revenue.
There is a professional yield management expression for this, it is called "Revenue Dilution", which basically is someone paying less than they would have paid under the previous tariff.
You can see it in US airline travel every day. Very few pay for First Class nowadays because the airlines are so free with upgrades. Carriers like British Airways or Cathay Pacific who do few upgrades find they can fill their premium cabins with paying passengers.