Economics of Airline Ticket Costs

Few months ago I had watched a programme on CNBC titled, "Inside American Airlines : A week in Life". I was amazed to find out about the narrow margins in airline industry, not to mention the various cost cutting mechanism already in place and the tricks of frequent flier trade.
One interesting aspect is the economics behind the ticketing. And I thought distance and fuel costs were the main criteria.

Some more interesting reading here

Q: You also got access to American's Dallas command center.
A: It's so quiet. Guys on headsets. Total Mission Control. They're tracking the performance of every flight. They're on the phone with NORAD (North American Aerospace Defense Command). There was a Tokyo-New York flight where a passenger was beating his wife and then punched a flight attendant. Now it's standard procedure to just call NORAD and get an escort of fighter jets. You act first and ask questions later.