Logo
Munich Personal RePEc Archive

The hidden side of dynamic pricing in airline markets

Alderighi, Marco and Gaggero, Alberto A and Piga, Claudio A (2016): The hidden side of dynamic pricing in airline markets.

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_71674.pdf]
Preview
PDF
MPRA_paper_71674.pdf

Download (740kB) | Preview

Abstract

An often disregarded, albeit central, aspect of the airline pricing's problem consists in assigning a fare to all the available seats on an airplane at the beginning of and during the whole booking period. We show how a flight's fare distribution is set in practice and how it changes over time using evidence from a leading European low-cost carrier. Such pricing behavior is consistent with the main predictions from the theoretical model we present. First, fare distributions are increasing across seats because a lower fare for the seat on sale enhances the likelihood of selling the subsequent seats. Second, over time fare distributions move, on average, downward to reflect the perishable nature of a flight's seats. Third, due to the increasing profile of the fare distributions across seats, we find that the price observed by prospective buyers tends to increase as the date of departure nears.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.