Gas Prices and the Example of Supply and Demand

A good rule of thumb to remember is where there is higher demand, there is less
seats available. It is possible there may be a surplus of cheap seats available, but realistically there will be a shortage of them if the prices are right. There are many demanding formulas supporting the mix, the process in which they are used is called yield management.
Airlines set economic goals they plan to achieve for each flight. Using a projected
number of people that they think are going to be flying at the time of the flight seat ticket prices is calculated. If the
flight is not selling as fast as predicted, an airline may release cheaper ticket prices in an effort to boost sales. This will happen closer to the travel date, before the airline needs to sell some of the tickets above their average price to make their predicted goal for sales.
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