Why do airline ticket prices skyrocket when you purchase them at the last minute when most other operations and retailers do the opposite? They sell them at a discounted price to get rid of the leftover tickets.
Using what we have learned so far in this microeconomics class, we can conclude that the buyer’s reservation price is directly linked to his or her opportunity cost at the time they are purchasing a plane ticket. When someone wants to purchase a plane ticket, they normally try to purchase it as soon as possible to make sure they get a ticket/seat and to get the cheapest price possible. When people have last-minute purchases of plane tickets, they are willing to pay a lot more than the people who have time and a lot of options for tickets and flights.
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Microeconomics of Airline Ticket Pricing and Price Discrimination
The people who are the most willing to pay the higher prices for last-minute plane tickets are also the people with the highest opportunity costs. The people who normally have higher opportunity costs are businessmen, men, and people who rely on travel for their careers. Often, airlines will offer cheaper tickets or discounts for flights when booking far in advance. This way, airlines are able to charge higher prices to the people making last-minute purchases.