A note on fares in regulated and deregulated airline markets : A comparison of Spain and the UK

Abstract

This note reports on a comparison of fares policy in international scheduled airline passenger services between deregulated markets in the UK and regulated markets in Spain, for the period extending from 1986 to 1991. The comparison looks at the range of fare types available; the extent to which fare types are made available across routes; and the discount rate for selected fare types. The methodology used to compare fare levels controls for exogenous factors such as differing distances and traffic densities. The study concludes that whereas the discounts offered for particular fare types need not be greater in deregulated markets, these markets display a wider range of available discounts. The likely resulting effect is that yields (revenue per passenger) are lower in deregulated markets.