[twentythree]

It might be unhelpful to the users who know how to take advantage of the current system, but hopefully the net impact will be greater price transparency, which helps consumers in the long run; people will pay more for things which cost the airline more, but not for arbitrary reasons like booking too early.

In general, flight pricing seems rather opaque; I'm always confused by flights from city A to city B that are more expensive than flights from city A to city C with a layover in city B. I'm all for more transparency of the air travel market.

[Kliment]

The problem is that there is no single price at which you can fill the plane enough and cover expenses. Set the price too low and your plane fills up but your costs are not covered. Set your price too high and you have so many empty seats that even with the handful of people paying outrageous prices you can't cover the cost of crew, fuel, and ground services. This means you have to sell some tickets at low prices, to attract the masses, and some tickets at high prices, to cover expenses. But now you have the problem of trying to prevent the people who can afford and are willing to buy expensive tickets from using the cheap fares. This is what leads to all the obscure rules about saturday night stays and layover impact and time of booking and whatnot. For a lot more info on this, see http://www.demarcken.org/carl/papers/ITA-software-travel-com...

Interestingly, low-fare airlines have tried working around the problem by setting prices super low, such that they lose money on each flight by default, but making it up in auxiliary services - either selling addons that cost them nothing on margin to implement (priority boarding, early checkin, seat selection), upselling external high-margin services (car rental, hotel bookings, airport transfer services, insurance, phone cards) or directly extracting money from customers (obtrusive advertising, in-flight sales pitches, extremely punitive charges for baggage/airport checkin/over-weight fees/not following obscure rules). This seems more sustainable than the traditional approach of customer price segmentation if price transparency increases over time.

[tonfa]

> In general, flight pricing seems rather opaque; I'm always confused by flights from city A to city B that are more expensive than flights from city A to city C with a layover in city B.

That example is pretty simple. If you consider a non stop flight as a different product than one with layover, non stop has less competition, people who don't mind a layover are more price sensitive and if there's a layover the airline will compete with all the other airlines trying to fill their hubs.