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Why airlines avoid offering cheap last-minute flights

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Why airlines avoid offering cheap last-minute flights
Policy
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Airbus A380 | Airbus

The practice of airlines offering cheap last-minute flights is not as common as one might think. While it seems logical that airlines would lower prices to fill empty seats, the reality is more complex.

Airlines employ dynamic pricing strategies to maximize revenue by charging different prices for tickets on the same flight. This approach allows them to extract the maximum price passengers are willing to pay. The phenomenon of passengers sitting next to each other having paid different amounts is often due to various factors influencing ticket pricing.

Interestingly, airlines tend to increase ticket prices as departure dates approach rather than offer discounts. A clear example is a Delta Air Lines flight from New York's JFK Airport to London Heathrow, where a last-minute ticket can cost around $700 compared to $200 when booked in advance.

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Legacy carriers like United Airlines, American Airlines, Delta Air Lines, British Airways, and Virgin Atlantic have developed sophisticated methods for distinguishing between business and leisure travelers. These include minimum stay requirements that prevent business travelers from accessing lower-priced tourist tickets.

Volodymyr Bilotkach in "The Economics of Airlines" explains: "In most cases, the airlines are better off waiting for a last-minute business passenger to come along and pay the full fare." Business travelers typically book closer to departure dates and are willing to pay higher prices for convenience.

For low-cost carriers such as Ryanair and easyJet focusing on leisure travelers, finding last-minute deals may be easier since their target market differs from that of legacy carriers.

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