Thanksgiving is the busiest holiday of the year for the airline industry. High travel demand means full seats and, presumably, full coffers for the airlines. But how do they decide how much to charge passengers?

The most important variable is competition. Until airline deregulation in the late 1970s, rates for flights were more-or-less determined by distance. Now, ticket prices have almost nothing to do with how far you're traveling and more to do with how many airlines are competing for your business. A short route flown by few carriers may be more expensive than a long route flown by all the major airlines. For example, flights between Portland and Medford, Ore., used to boast extraordinarily high per-mile fares, at least until more airlines began offering that service. The presence of discount carriers, such as JetBlue or Southwest Airlines, can drive prices even lower on a given route.

An airline will adjust its ticket prices on a minute-by-minute basis, depending on what competitors are charging. But how do they know the other guys' prices? Each airline enters its rates into the Airline Tariff Publishing Co. computer system, which in turn supplies information about all the others. Plus, most airlines supply their rates and flight availability to booking systems used by travel agents and online travel sites, called Global Distribution Systems.

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