> I am not a fan of airlines because, among other reasons, it often appears that demand and competition aren't driving price.
First off airlines are an extremely low margin business.
AA's net margin is 1.26%, Delta's net margin is 5.91%, United's net margin is 6.43%, Alaska's net margin is 2.86%. These aren't exactly blockbuster SaaS numbers.
Demand and competition absolutely drive price reductions - competitive routes have much lower revenue per available seat mile - and adjusted for inflation air travel is wildly cheaper than it used to be. Since 1995 the cumulative inflation-adjusted price of domestic air travel is down almost 37%. [1] Thanks to competition you can fly from SFO to NYC for $99, non-stop, next month. On the other hand SFO to GUM is $1662 ($1100 on a half round trip basis), because there's no competition.
Airlines with both a domestic and international route network tend to lose money on their domestic routes and make up for it on their flagship international routes, but even still, they make most of their money on frequent flier programs and credit card relationships.
St Louis Fed has a good write-up on the economics of air travel. [2]
[1] https://www.bts.gov/content/annual-us-domestic-average-itine...
[2] https://www.stlouisfed.org/publications/page-one-economics/2...
