As an airline industry insider, I am going to shed some light about how airlines price their seats. To most travelers, this appears to be a rigged game to squeeze every cent out of you. The truth is, it is. However, there are several tricks and tips you can use to get the best fare possible.
The first component of the price determinant comes from the fixed cost of getting a person there and the infrastructure. The cost of the plane, the personnel to run it, and the fuel are the biggest components into a ticket price. Airlines say we are running this plane and it costs this much to operate to get there and we need x amount of dollars to break even. To hit the break even point, airlines price the biggest discount months upfront so they can hit this target early. That is why you should always book in advance.
Forecasting supply and demand also comes into play. If there is a big event going on, airlines model their pricing structure accordingly and raise prices. However, if there is competition, or more supply, then this plays a role as well. Some people may ask, why does it cost $400 to travel to Tulsa and only $200 to travel to Orlando when Tulsa is hours closer? The answer is competition. Not many airlines operate to Tulsa so they can charge more because you are left with no other option. Fly my airline or take the bus or walk you have no choice. Whereas to Orlando, almost every airline flies there so someone else "competes" for your fare.
