flying on the cheap

When planning a long distance trip in advance, one of the first things you consider are the prices of airline tickets. But how do you know that the price you are looking at today is going to be better or worse than the price a few weeks from now? Experience. But of course with the internet, comes data, and historical data on flights... So you could start to track trends in pricing, and start to make estimated forecasts on what you think the flight prices may go up or down to...

I'm flying out to Colorado in January, and looking to book my flight... and it got me thinking, what is a 'fair' price for an airline ticket?

There seems to be plenty of competition out there on the internet for services which help you to find the cheapest flights, with Travelocity, Expedia, Cheaptickets,
Priceline all players competing for your attention to book through them and offer the best value... A new site called Farecast, is offering limited forecasts based upon historical data of where they think the prices are going.. it's a good concept, as long as they can earn peoples trust and forecast somewhat accurately -- With oil prices and security costs rising, maybe they'll just recommend that prices are most likely going to go up, so buy now? They probably account for typical volume increases around the holidays, when a lot of people fly to visit family -- but I wonder if they consider external news events into their calculations? Another question is how do airlines themselves structure their pricing model so that they can remain profitable? The airlines must be forecasting demand based on historical data as well to best serve the customer base? It's an interesting concept...

I'm thinking of how to develop my own formula for determining what is a fair price to pay for a ticket... this may be a good start...

Miles Traveled * Cost per Mile = Fair Price of airline ticket.

In a car, lets say that I get 20 miles per gallon, and the current price of a gallon is $3.00. 1000 Miles * $0.15 = 150$. Time is money though, mainly because I have to take vacation time to travel, so how do I add this to the model?

1000 Miles at ~ 75 mph = 13.3 hours of driving....
1000 Miles at ~ 500 mph = 2 hours of flying...

Since flying is roughly 7 times as fast, (more direct and no stops) How much is that worth? With the average american making ~20$ per hour, and the average time spent by flying vs driving a 1000 miles, that's approximately 220$ of personal time value.

But what about capacity? The average American vehicle seats 4+ comfortably, so should we consider this into the equation somehow as well? And if the trip is more than 1000 miles, food and lodging prices come into play... I'll have to think about this more during my commute and continue this post another day....