Dan didnt make it up it has been discussed on the travel blogs for years. The only thing that Dan ever broke himself to my knowledge was the El AL deal. His contribution is that he is great at explaining concepts and responds to lots of questions on his posts.
@YWMod42 the airlines could be losing money if the flight is full and someone would have paid full fare for that route – not as uncommon as you would think.
Either way its not illegal.
@nishtdayngesheft there are a lot of factors that go into how expensive it is for an airline to fly from a certain airport(for example LGA vs. JFK etc.) and it also has to do with supply and demand (ie. how many seats on that route are typically used etc.) Sometimes there are normally scheduled routes which are rarely filled up so they are much cheaper. Jfk to TLV is the most lucrative of any route in the world so there is no incentive for the airlines to price low. There are a lot of quirks in the system but at the end of the day it is the most profitable for the airlines.