There are lots of empty seats out there. Why aren't airlines selling them cheap on the day of the flight?
I've seen a few anecdotal answers to this question. A lot of the answers come down to "cannibalization." If flyers know a flight will be available for cheap last minute, then they won't purchase a more expensive ticket ahead of time.
This makes some sense. But so does the idea that customers would still be willing to pay a premium for a guaranteed seat on a plane (the price of flying is fairly inelastic. See: business travelers). And selling empties would contribute significantly to the bottom line.
Is fear of cannibalization the real reason flights don't sell expiring inventory? If so, is there evidence to support this fear? Or is there another reason altogether why airlines don't make last minute seats available?