Airline type here,
jsmith is right as far as he/she goes. The key thing to understand is that there is not one price for any given flight. At any given moment there are 30 or 40 or 50 prices for different seats on that flight based on different rules.
Want an unrestricted fare? $450.
Willing to pay a $25 change penalty if needed? $375
Willing to stay overnight or buy roundtrip? $300
Willing to stay overnight, buy roundtrip, AND pay a $25 change penaltyif needed? $250
etc.
The typical travel website doesn’t show you all the details, at least not directly. If you go to the airline’s own site you’ll often see the very same flight with a dozen different prices and if you click the link for “more details”, you’ll see all the rules and ramifications.
So that’s the static part of the complexity: You’re thinking you’re just buying a seat, and they’re really selling a seat and a bunch of contractual details, each of which is a different price.
Now for the dynamic part. They’re actually running a continuous auction for each set of purchase rules for each flight on each date. At any moment there is a certain demand for tickets with that rule-set. Meanwhile, there are a certain number of hours/days/weeks untl the flight leaves.
Their goal is to adjust the price so 3 minutes before the plane leaves they will have auctioned each seat of each type to the highest bidder over the last couple of months.
Meanwhile, the goal of their comptitors is to do the same, but for $1 less so they capture all the customers.
And the customer’s goal is to play the two off against each other, in effect having them in an bidding war to “buy” the customer’s purchase for the lowest possible price.
And each airline can see the up-to-the-moment fares of the other in complete detail. Imagine KMart & Wal-Mart knew each other’s price on every item in every store to the penny and knew about price changes withinin seconds of them happening.
Now imagine the customers buy considering only one issue, price. And on a ballpark-$400 purchase they’ll gladly go to insane contortions like fly 4 legs or stay up all night to save $5 out of that $400. That behavior, insane though it is, is in fact what about 85% of the traveling public uses to make their purchase decisions. Price trumps everything, and a tiny price difference is all it takes.
Now add in a few smart middlemen like Orbitz, et al, who’re paid a flat fee for getting a sale, any sale, and you have a recipe for duelling computers with us poor humans reduced to watching in bewilderment as the machines fight each other to come up with the number they think wil outsmart the other guiy’s computers … for a few seconds … until the situation shifts again.
You are seeeing the future of commerce.
Your grocery store wants to do the same thing to you, continuously adjusting the prices to charge extra for whatever’s in your basket. They’re thinking they can outsmart you and gouge you an extra $20 or whatever.
And it’ll work awesome until you get smarter/more defensive, or until their competition starts doing the same thing. And then it’ll degenerate into the incomprehsible and ultimately destructive mess we’ve got in the airline industry.