It's just a form of price discrimination. Early bookers are usually price-sensitive individuals. They're prepared to shop around, or even forgo the trip if it's

It's just a form of price discrimination. Early bookers are usually price-sensitive individuals. They're prepared to shop around, or even forgo the trip if it's too expensive. Late bookers are mostly corporate customers or price-insensitive individuals. So airlines make the most revenue by setting prices low early on, and higher toward the flight date. They certainly care about unused seats, but the revenue from expensive last-minute bookings normally outweighs the revenue they would get from filling all remaining seats at a discounted price. They do their best to minimize unused seats by getting the prices right early on, and adjusting based on observed demand. But at a certain point, it makes sense to raise prices even if it's highly likely that there will be unused seats.