AirTicket Sales as Bids from Airline Alliances

Motivated by the higher price sensitivity and service homogenisation in the airline industry in recent years, we propose a new methodology to deal with transaction prices and to estimate the effect of alliances in the US domestic market. The assumption that airlines compete on price allows us to take advantage of the observational equivalence between Bertrand competition and the reverse English auction. We then apply an MLE method, developed by Paarsch (1997) for esti- mating auctions, to recover the distributional characteristics of air fares using a sample of airline tickets from the US domestic market. This procedure allows us to benefit from the heterogeneity of individual prices while most studies have used average prices, which would have involved a loss of information and a potential bias. We find that an alliance operating in a market is associated with prices on average 18.9 percent higher. Additionally, we find the standard deviation of ticket prices to be 4.3 percent higher, which is likely related to more efficient revenue management practice by alliance partners operating together in the same market

The Social Cost of Air Traffic Delays

The so-called buffer time or buffer delay allows airlines to control for excessive delays by introducing extra time in their schedule in addition to what is technically required. . We study the differences between unregulated markets - where airlines are free to fix their buffer times strategically - and a situation where a social planner would control for time schedules, and in particular the buffer time. To do so, we use a calibrated model of a network of three cities - one of them being a hub - served by a single airline. Welfare losses that follow from delays are relatively small as compared to the potential benefits that would follow from a decrease in ticket prices. The model thus advocates that, at least for the connections that are considered, fares rather than delays should be the focus of institutions aiming at enhancing passengers’ welfare

Airline cooperation effects on airfare distribution: an auction-model-based approach

Airline alliances have a long history yet there is no academic consensus on how they affect price levels and their impact on price dispersion has not yet been studied. We address this question using a novel methodology motivated by the service homogenization and increased price competiton in this industry in the recent years. Establishing an equivalence between the online sales process and a reverse English auction, we use methods from auction econometrics to work in a new way with the standard industry data set: using individual ticket sales where only aggregated prices have been used in the past. Applicable to other industries where sellers compete in prices, this approach allows us to reconsider the effect of airline alliances on the distribution of airfares in the US domestic market. We find lower price mean and dispersion in markets where airlines belong to an alliance as a result of the lower variability of costs. The methodology we apply here can be used to study any distribution of individualized prices, which are now prevalent since the advent of the digital economy

Measuring Airline Networks: Comprehensive Indicators

International audienceThe literature on airlines presents few studies analyzing the airlines network evolution and its impact on prices, costs or profitability. We believe that this gap is due to the difficulty of capturing the network complexity in a simple manner. This paper proposes new simple and continuous indicators to measure the airlines network structure. The methodology to build them is based on graph theory and principal component analysis. We apply this approach to the US domestic market for 2005-2015, and obtain three network indicators. The first one measures how close the network is to a hub-and-spoke structure. The second indicator measures the airline's ability to provide alternative routes. The third indicator captures the network size. We analyze how the carriers' network evolution can be described by those indicators. We show that low-cost carriers (LCCs) and legacy carriers' network choices differ for the second indicator, while our results exhibit no difference in strategies for the other two indicators. We also show that economic conditions affect differently the three indicators and the magnitude of the impact depends on the airline type. Highlights: ● Combine graph theory and principal component analysis ● Obtain three indicators to characterize airline network structure for US domestic market ● Compare these indicators for low-cost and legacy carriers ● Estimate evolution in the indicators over time ● Analyze the impact of the main US mergers on the network structur

Dynamic price competition in air transport market, An analysis on long-haul routes

International audienceWe study airline price competition on long - haul markets. Our analysis includes the two main determinant s of airline pricing strategies: average level of price and price dispersion. This joint analysis is particularly relevant on mature market where airlines face an increasing competitive pressure from incumbents and potential entrants. To lower price competition, they tend to differentiate their products and use complex discriminatory practices on the basis of their Revenue Management process . The price level and dispersion are jointly affected by a number of common factors. The level of competition and the date of booking compared to the day to departure appear to have a particular relevance. It’s much noticing that in the airline Revenue Management process these two elements are taken into consideration. Much of the models developed in the empirical literature use the information freely provided by the US DB1B database . This restricts the empirical analysis to the US market, but most obviously the restriction lies in the quarterly nature of the data . The day of purchase is not observed and the data are quarterly aggregated

Expansion of International Airline Networks: an Application to US Carriers

International audienc

Network development and excess travel time

International audienceWe study the impact of airlines network design on excess travel times for the main US carriers between 2008 and 2017 and find that network configuration affects excess travel time. Based on graph theory and a principal component analysis we build four continuous indicators to measure the airlines networks. We observe that airlines serving more destinations, organizing flights landings and take offs around banks or moving towards a point to point configuration present higher levels of excess travel time. However, there does not seem to exist a preferred network configuration between hub and spoke or point-to-point configuration to reduce excess travel time. We also find a nonlinear impact of competition measured at the city-pair level over excess travel time. These results are robust when analyzing observed delays rather than excess travel time

Clipper szardínia 12.-Ft ; Bicski paradicsomos hal 9.-Ft ; Ambre szardínia 10.- Ft - a Földművesszövetkezet boltjában

Magyar HirdetőVízre emlékeztető, kékeszöld háttér előtt három hal rajza látható, belsejükben egy-egy konzervet találunk. Balra lenn ötágú csillagos, Szövetkezet feliratú címer látható

Expansion of International Airline Networks: an Application to US Carriers

International audienc