Are you certain that LCC's can't return a seat to inventory if it is cancelled?
I think the point
davidjohnson6 is making is that there is no incentive for a passenger to cancel a booking that they know for certain that they won't be using, potentially costing the airline money if the flight is busy.
I'm from Liverpool. In May 2007 I booked a return to Belfast with four friends. We booked LPL-BFS-LPL with EasyJet, costing under £40. Our return flight was due to depart on the afternoon of the Champions League final.
A few weeks before departure, Liverpool FC made it through to the final and one way fares on this flight instantly shot up to in excess of £250 and quickly sold out! Wanting to stay in Liverpool for the football, I tried to cancel the booking. In the circumstances, I thought easyJet might even offer us money for cancelling the flights given that they'd make over a grand reselling our seats. They refused, telling me that we'd get no refund if we cancelled. I'm sure they could have returned the seat to inventory if we cancelled but there was no incentive whatsoever for us to do so, even though it would have been in their interests!
We eventually decided to fly and had a great time bantering with loads of drunk Irish football fans on the way home!
