But a ticket sold three months out isn't worth the same to the buyer as a ticket sold the same day. A seat is a seat is a seat, you might say. That explains why the life-cycle of an airfare resembles a roller coaster. So airlines have to design a system that fulfills the following goals: Sell as many seats as possible, sell them a profit, but also leave some empty for desperate travelers. This is because last-minute flyers tend to be desperate people (they'll pay anything) or businesspeople expensing to their companies (they'll pay anything). As you know, airfares rise in the final hours. So the price of a ticket should fall as we approach takeoff, right? Wrong. When the doors of an airplane close, each empty seat is lost money. It's like a multi-billion-dollar game of cat and mouse played out between competing machines - with William Shatner caught the middle. We use computers to find the lowest price. MACHINE: THE PRICE WARS In the showdown between airlines and flyers, both sides wield a formidable weapon. "When you have intense competition for a product that is price sensitive, you have falling prices." Why did deregulation create such dramatically falling prices? "Flying is neither a life necessity like tuition, milk, or medicine, nor is it addictive, like alcohol or drugs," said John Heimlich, vice president and chief economist at Airlines for America. On Kayak, just now, I found one for $278. In 1974, it was illegal for an airline to charge less than $1,442 in inflation-adjusted dollars for a flight between New York City and Los Angeles. The number of air passengers tripled between the 1970s and 2011. By 2000, 50 percent of the country took at least one round-trip flight a year. In 1965, no more than 20 percent of Americans had ever flown in an airplane. The democratization of the air is obvious enough from the frenetic bustle of every major U.S.
Three decades later, the lesson from Texas - if you deregulate the skies, ticket prices will fall - has been applied across the country. And an intra-Texas airline boasted that the farmers who used to drive across the state could fly for even less money - and it would carry any chicken coops for free. The San Francisco-Los Angeles fare was about half that on the comparable, regulated Boston-Washington route. In California and Texas, where fares were unregulated, they were much lower.
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