I have simple question and I hope you could help me with it. Why when someone books for one week for international flight during vacation time, it will be cheaper than two weeks, and two weeks cheaper than three weeks? Why is that from an economic prospective?
I always thought that it was the other way around: the closer you are to the departure date the higher the price. Airlines have some market power and use pricing overtime as a way to second degree price discriminate: Consumers who plan long ahead their vacations have lower valuation for a trip than those who need transport at the last minute. This has to be true in particular during vacation times when airplanes are full.
I’m questioning whether the “fact” stated is actually a fact. I can see the price going up or down as the travel date approaches depending on an airline's market power and whether an aircraft is expected to be full.
Here are some data: