Everything about their pricing model is crazy. This morning the persons sitting a couple of seats over from us probably paid triple what we paid for the same seat.
There is a theory bandied about within the airline industry that kind of explains everything. It's called the "Bananas and Sex Theory of Aviation." It was explained to me many years ago and it goes like this:
Like bananas, airplane seats have a finite date after which you cannot sell them. For bananas, it's when they go rotten. For airline seats, it's when the plane takes off. So if you sell bananas, it's better to get something for them when they start going bad than nothing, even if what you get is a loss. Airplane seats are the same way. Once the plane takes off you can't even give the seats away. So you take steps to prevent you from having to "throw away" an empty seat.
While very simplistic, this theory explains a lot about the pricing "system" the airlines use for tickets.
The sex part is simple. The airline industry, and the aerospace industry in general, is a very sexy industry to be in. So the people in it will do pretty much anything to stay in it even though its cyclical nature means that in an upturn (like now) you can make a lot of money while in a downturn (which is on the way) you will very likely lose your shirt. This is one reason why companies like the one I work for make the decisions they do. To the outside world, they can make no sense. But inside the industry, they make all kinds of sense even though in the light of stark reality they may not.
A lot of people, probably most people along with the media, think the plane pictured below was a big mistake on Boeing's part. In fact, it wasn't. There was no question it would have worked as advertised. I knew and interviewed at length the engineer who came up with the concept that made it work-- we referred to him publicly as "Engineer-X" to prevent the competition from finding out who he was and hiring him away.
The plane was a brilliant concept and the airline's loved it. This industry has always about being three things: faster, farther, and carrying more. It's why we and Airbus develop airplanes that can spawn "families." Get longer, carry more passengers, increase their useful loads and range, and so on. It's one reason we quickly killed off the McDonnell Douglas commercial lineup after the merger. Their planes couldn't grow into families, particularly the MD-95/717.
The Sonic Cruiser promised all three--- faster, farther, and carry more--- and it would have delivered.
Airlines were cuing up to place orders and then they started to think about the cost of fuel. And they started to think about their competitors. And they started to think about the "bananas" part of the "bananas and sex" theory. And they all got cold feet. For good reason, it turned out.
Fortunately, we were hedging our bets because we have plenty of skeptics on our developmental design teams. While we were making lots of noise about the Sonic Cruiser, we were also very quietly designing another plane. A more conventional plane, a slower plane, a more efficient plane. We called it "Project Yellowstone."
Now the sex part of the "Bananas and Sex" theory meant that nobody here wanted to build Yellowstone. We wanted to do the Sonic Cruiser. How cool would it have been to have them parked at airport gates next to the competition's humdrum conventional planes.
But in the end, the Sonic Cruiser started to stumble-- not because it wouldn't have worked as an airplane but because the airlines were starting to guess or speculate or flat out know what was coming their way financially. So we--- reluctantly--- began to talk to them about Yellowstone. And they--- reluctantly--- began to say, "You know, that's maybe what we'd better get."
So Yellowstone became the 7E7 and then a few years later the 7E7 became the 787. And the Sonic Cruiser, as cool and sexy a plane as it would have been, quietly slipped away other than a handful of desk models which around here to day are very valuable.