Yield management

Why do airlines often insist that you pay for your ticket on the date you book your flight rather than the date you actually fly?

One reason is time value of money the earlier the airlines receive the cash, the more valuable it is to them. A second reason is that airlines follow a practice they call “yield management” in which they try to charge the highest price for every ticket they sell. By insisting that some customers pay at the time of booking, they can charge more for tickets that do not require immediate payment.

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