I will be flying to Arequipa from Lima. What is the situation with getting a plane ticket to Arequipa as soon as I land in Lima? is it possible / difficult? What is the cheapest and most reliable airline?
Also do I really need to book a Machu Picchu tour months before or can I get a tour booked when I get to Cuzco for a day or two after i get to Cuzco?
If you want to do the classic inca trail (2.5 days of hiking past a series of increasingly impressive inca sites, 3 nights of camping, and a final hour of hiking on day 4 to arrive at the sun gate into Machu Picchu around sunrise, with the rest of the day spent at Machu Picchu), and you want to do that during high season (may-september), then yes, you need to book that at least 3-4 months in advance, preferably more if you have specific dates. There's only 500 people allowed on the trail each day, and that includes the guides and porters.
In the shoulder season, you can get away with booking only 4-8 weeks in advance. In low (rainy) season (december, january, march) you can show up and get a tour within a week or two, frequently within a few days. (Don't know if that's still true, actually - but haven't heard otherwise.) You can't do the trail in February; it's completely closed for cleanup.
If you want to do one of the "alternative inca trails" (hiking 3-6 days over various paths which might or might not have been used by incas, all in the same area, but none actually arriving at Machu Picchu via the sungate - instead all spending the final night in Aguas Calientes and then going in through the main entrance, same as the daytrippers), then you can book a few days to a few weeks in advance.
If you just want to go to Machu Picchu for a day or two, you can take a (bus and) train to Aguas Calientes, and the bus from there to the main entrance, and don't need a tour at all, but can just do that by yourself. Train tickets should be booked a few days in advance during high season, just so you don't have to leave too early, but otherwise you can just show up.
Thanks once again for helping me out. I'll book MP trail as soon as I have the exact dates