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Airline Pricing Behaviour Under Limited Intermodal Competition

  • Angela Stefania Bergantino

    ()

    (Università degli Studi di Bari "Aldo Moro" (DiSAG))

  • Capozza, Claudia

    (Università degli Studi di Bari "Aldo Moro" (DiSAG))

This paper empirically analyses airline pricing for short-haul flights in contexts with no credible threat of inter-modal competition. To this end, we explore the southern Italian market since it is less accessible by other transport modes and thus fares are the direct outcome of air-related competition. We show, in fact, that market power matters, depending on the level of intra-modal competition, and that airlines apply differentiated mark-ups. Besides, consistent with the implementation of inter-temporal price discrimination (IPD), we find a non-monotonic inter-temporal profile of fares with a turning point included in the interval of the 43th to 45th days before departure. Finally, we provide evidence that in more competitive markets, airlines are more likely to engage in IPD.

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Paper provided by SIET Società Italiana di Economia dei Trasporti e della Logistica in its series Working Papers with number 1206.

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Length: 34 pages
Date of creation: 2012
Date of revision: 2012
Handle: RePEc:sit:wpaper:12_06
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