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Frequent flyer programs premium and the role of airport dominance

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  • Escobari, Diego

Abstract

This paper estimates a Frequent Flyer Programs (FFP) price premium -- higher fares associated with a larger proportion of travelers using FFP. The results show that FFP affect the entire price distribution, but the effect is larger on lower end fares. In addition, airport dominance increases the premium on less expensive fares but has no effect on the premium associated with the right tail of the price distribution.

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File URL: http://mpra.ub.uni-muenchen.de/36231/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36231.

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Date of creation: Nov 2010
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Publication status: Published in Applied Economics Letters 16.18(2011): pp. 1565-1569
Handle: RePEc:pra:mprapa:36231

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Keywords: Frequent Flyer Programs; Pricing; Airlines; Panel Data;

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  1. Severin Borenstein & Nancy L. Rose, 1991. "Competition and Price Dispersion in the U.S. Airline Industry," NBER Working Papers 3785, National Bureau of Economic Research, Inc.
  2. Mara Lederman, 2007. "Do enhancements to loyalty programs affect demand? The impact of international frequent flyer partnerships on domestic airline demand," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1134-1158, December.
  3. Kristopher S. Gerardi & Adam Hale Shapiro, 2009. "Does Competition Reduce Price Dispersion? New Evidence from the Airline Industry," Journal of Political Economy, University of Chicago Press, vol. 117(1), pages 1-37, 02.
  4. Mara Lederman, 2008. "Are Frequent-Flyer Programs a Cause of the "Hub Premium"?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(1), pages 35-66, 03.
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