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Discount opportunities in hub-and-spoke networks: The determinants of hidden-city ticketing

Luttmann, Alexander and Gaggero, Alberto A (2022): Discount opportunities in hub-and-spoke networks: The determinants of hidden-city ticketing.

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Abstract

We offer a comprehensive empirical study on hidden-city ticketing (HCT), a pricing phenomenon in the airline industry that occurs when the fare for a nonstop trip from A to B is more expensive than a connecting trip from A to B and B to C. Exploiting a unique panel of over 772 thousand fares for flights departing between October 1st, 2019 and February 29th, 2020, we find that HCT depends on route competition (both on A-B and A-C routes), largely occurs in the last week to departure, and primarily occurs on carriers that operate large hub-and-spoke networks (e.g., American, Delta, and United).

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