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Are airlines' price-setting strategies different?

Author

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  • Bilotkach, Volodymyr
  • Gorodnichenko, Yuriy
  • Talavera, Oleksandr

Abstract

Using a sample of fare quotes for non-stop travel from New York to London, this paper documents a set of stylized facts about pricing strategies of air carriers on this route. Two key facts stand out. First, airlines appear to employ strikingly different pricing strategies. Second, fares increase at an accelerated rate as the departure date approaches.

Suggested Citation

  • Bilotkach, Volodymyr & Gorodnichenko, Yuriy & Talavera, Oleksandr, 2010. "Are airlines' price-setting strategies different?," Journal of Air Transport Management, Elsevier, vol. 16(1), pages 1-6.
    • Handle: RePEc:eee:jaitra:v:16:y:2010:i:1:p:1-6
    DOI: 10.1016/j.jairtraman.2009.04.004
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    References listed on IDEAS

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    1. Volodymyr Bilotkach, 2007. "Asymmetric Regulation and Airport Dominance in International Aviation: Evidence from the London-new York Market," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 505-523, October.
    2. Darin Lee & María José Luengo-Prado, 2005. "The Impact of Passenger Mix on Reported “Hub Premiums” in the U.S. Airline Industry," Southern Economic Journal, John Wiley & Sons, vol. 72(2), pages 372-394, October.
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    4. Steven Berry & Michael Carnall & Pablo T. Spiller, 1996. "Airline Hubs: Costs, Markups and the Implications of Customer Heterogeneity," NBER Working Papers 5561, National Bureau of Economic Research, Inc.
    5. Shibata, Kyohei, 2001. "Motives for mega-alliance between US ex-trunk carriers and European flag carriers," Journal of Air Transport Management, Elsevier, vol. 7(4), pages 197-206.
    6. Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
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    More about this item

    Keywords

    Airline industry; Price dynamics; Airline fares;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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