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Airfares and Competition on International Routes

In: The Economics of International Airline Transport

Author

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  • John Bitzan
  • Alice Kones
  • James Peoples

Abstract

This chapter uses airline data on fares, traffic, and flight characteristics to estimate a series of fare equations for international flights. The results are used to examine the role of international competition as a determinant of fares along international flights originating or departing from the United States. Findings suggest that actual and potential competition are important determinants of international airfares. We interpret these results as indicating that pricing behavior along US–international routes is consistent with the theory of imperfect contestability.

Suggested Citation

  • John Bitzan & Alice Kones & James Peoples, 2014. "Airfares and Competition on International Routes," Advances in Airline Economics, in: The Economics of International Airline Transport, volume 4, pages 151-176, Emerald Group Publishing Limited.
  • Handle: RePEc:eme:aiaezz:s2212-160920140000004005
    DOI: 10.1108/S2212-160920140000004005
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    More about this item

    Keywords

    Imperfect contestability; international air fares; Open Skies Agreements; cabotage; L93; L11;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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