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The effect of vertical product differentiation on fare and market share: Evidence from Delta Air Lines’ middle seat policy

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  • Hyman, Max J.
  • Savage, Ian

Abstract

Delta Air Lines engaged in vertical product differentiation during the COVID-19 pandemic. To ensure that passengers did not sit next to a stranger, Delta did not sell the middle seat on its flights that had them. Its principal rivals, American Airlines and United Airlines, sold all seats. Analysis of the non-stop routes on which Delta faced head-to-head competition with American or United reveals that Delta was able to charge a 10% fare premium and increase its relative market share by 4.7 percentage points from its middle seat policy.

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  • Hyman, Max J. & Savage, Ian, 2022. "The effect of vertical product differentiation on fare and market share: Evidence from Delta Air Lines’ middle seat policy," Economics of Transportation, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:ecotra:v:31:y:2022:i:c:s2212012222000259
    DOI: 10.1016/j.ecotra.2022.100274
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    References listed on IDEAS

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    Cited by:

    1. Gualini, Andrea & Zou, Li & Dresner, Martin, 2023. "Airline strategies during the pandemic: What worked?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).

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    More about this item

    Keywords

    Vertical product differentiation; Aviation; Pandemic;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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