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Comment by rcar | Hacker News Reader

This sort of thing shows up in lots of different pricing mechanisms. There's no structural reason why plane or train tickets should be cheap far in advance and then go up in price a lot as the departure date nears; it's just that people who are willing to book early are going to be cost-conscious and might compare prices on multiple options while those late might care more about convenience than price (e.g., people traveling on their company's dime).

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There is a structural reason:

https://en.wikipedia.org/wiki/Supply_and_demand

The people setting the prices on expiring goods are gambling on where the supply and demand curves will be, and they're probably wrong so they go up and down. Next time you reserve a hotel room, check the prices right before your cancelation window expires. There's a good chance the room prices have dropped.

Edit: Also there might be some price discrimination involved. Since each buyer values goods differently, it is most optimal for sellers to charge the most each buyer is willing to pay, and it could be true that those seeking last minute flights are business travelers willing to pay more (or those with emergencies willing to pay more). Also works with grocery store coupons and discount codes, those whose time isn't worth looking for coupons won't bother.

Doesn't buying plane tickets in advance let airlines plan capacity better?

They can do some capacity modulation through pricing, sure, but their historical DBs have a large enough 'n' (American Airlines SAABRE was the first big database application and drove database design) that they can predict pretty well. Which is why the bumped-due-to-overbooking is pretty low.

BTW I think it's appalling that overbooking is allowed in this age of nonrefundable tickets. You've paid for the seat; whether you sit in it is your business. In the old days of regulation most tickets were fully reusable, and overbooking harks back to that time.

For many airlines, you can re-schedule your non-refundable ticket for another day for a fraction of the cost of the original ticket. You still have to fly on that airline at some point to recoup any of the value of the ticket, but it can be done.

I can't reply to my sibling post https://news.ycombinator.com/item?id=14301909 , where this comment probably belongs, but I hoped I might be allowed to clarify that my badly worded response was not meant to be meaningless snark. What I meant to say in response to

> Doesn't buying plane tickets in advance let airlines plan capacity better?

was that whatever airlines are doing to plan their capacity doesn't seem to work very well. In support of this vague claim I adduced a news incident, very very snarkily (for which I apologise), but honestly in a spirit of discourse rather than simply of attention grabbing.

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