On any given plane full of passengers, few of them pay the exact same price. Airline fares change daily, sometimes even hourly. The effects of these price changes often affect the demand for tickets.
In most cases, a higher fare results in lower demand (especially if cheaper substitutes are available, such as trains and buses). The two major factors that determine airfare are fuel and, to a lesser extent, competitor prices.
Certain consumers respond more to a price change than others. If you are debating where to vacation, a high-priced airline ticket to Barbados might convince you to road-trip to a neighboring state instead.
Airlines raise fares for business travelers. For business consultants working for a top firm, fare increases will not affect their decision to charge pricey first-class tickets to the corporate bank account.
During the holidays, higher demand exists for airline tickets. College students want to fly home for Thanksgiving, and parents are willing to incur a higher price. The fares can rise with little effect on demand.
The price of a ticket for a last-minute flight from Phoenix to Las Vegas can be more expensive than a ticket bought two months beforehand for a trip from Phoenix to New York. Those who need to purchase a last-minute ticket out of necessity will be undaunted by the effects of a fare change, which can result in astronomical costs.
