Based on two strands of theoretical research, this paper provides new evidence on how fares are jointly affected by in-flight seat availability and purchasing date. As capacity-based theories predict, it emerges that fares monotonically and substantially increase with flight occupancy. After controlling for capacity utilization, our analysis also supports time-based theories, indicating a U-shaped temporal profile over a two-month booking period, as well as a sharp increase in fares in the two weeks prior to departure.
Alderighi, M., Nicolini, M., & Piga, C. A. (2015). Combined Effects of Capacity and Time on Fares: Insights from the Yield Management of a Low-Cost Airline. Review of Economics and Statistics, 94(4), 900-915. https://doi.org/10.1162/REST_a_00451