Why Airline Tickets Cost So Much (or Don’t)

New York City is 371 driving miles from Pittsburgh. Los Angeles is 2,427 miles away. Yet flight prices to the Big Apple and the City of Angels rarely reflect those disparate distances.

With a week’s advance purchase, the cheapest round-trip flight to New York last week was $607 on the popular Kayak travel website. The most economical return flight to Los Angeles? $333.

Why would a one-hour flight cost nearly twice what a cross-continent trip costs? The main reasons, industry experts say, are demand and competition on a given route, which airlines dominate which airports, and timing. Counterintuitively, distance is a secondary factor when it comes to pricing air travel.

Airlines determine what to charge through elaborate calculations that go into “dynamic pricing,” a business strategy in which product prices continuously adjust – sometimes in a matter of minutes – in response to real-time supply and demand.

It’s a strategy that airline industry officials don’t want to discuss in detail.

“Pricing is a regulated topic and that restricts our ability to offer ‘real time’ (and certainly ‘future’) commentary on the topic,” one airline’s media office said in an e-mail.

The bottom line: “Airlines always want the maximum you are willing to pay,” said Bijan Vasigh, a professor of economics and finance at Embry-Riddle Aeronautical University in Daytona Beach, Fla.

Last-minute buyers pays more

One factor airlines incorporate into pricing is how much passengers need to make the trip, Vasigh said. Last-minute purchases, for example, almost always mean a traveler has little or no choice about whether to travel, he said.

One week out, New York fares from Pittsburgh could reflect heavy use of the route by business travelers who often travel last-minute and aren’t paying for the flight themselves, Vasigh said.

“They have no choice, or little choice, about whe