Combined Effects of Capacity and Time on Fares: Insights from the Yield Management of a Low-Cost Airline

Marco Alderighi, Marcella Nicolini, Claudio A. Piga

Research output: Contribution to journalArticle

21 Citations (Scopus)

Abstract

Based on two strands of theoretical research, this paper provides new evidence on how fares are jointly affected by in-flight seat availability and purchasing date. As capacity-based theories predict, it emerges that fares monotonically and substantially increase with flight occupancy. After controlling for capacity utilization, our analysis also supports time-based theories, indicating a U-shaped temporal profile over a two-month booking period, as well as a sharp increase in fares in the two weeks prior to departure.
LanguageEnglish
Pages900-915
Number of pages16
JournalReview of Economics and Statistics
Volume94
Issue number4
Early online date28 Sep 2015
DOIs
Publication statusPublished - Oct 2015
Externally publishedYes

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pricing
flight
costs
management
capacity utilization
evidence
time
Low-cost airlines
Yield management
Seat
Purchasing
Capacity utilization

Cite this

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abstract = "Based on two strands of theoretical research, this paper provides new evidence on how fares are jointly affected by in-flight seat availability and purchasing date. As capacity-based theories predict, it emerges that fares monotonically and substantially increase with flight occupancy. After controlling for capacity utilization, our analysis also supports time-based theories, indicating a U-shaped temporal profile over a two-month booking period, as well as a sharp increase in fares in the two weeks prior to departure.",
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Combined Effects of Capacity and Time on Fares : Insights from the Yield Management of a Low-Cost Airline. / Alderighi, Marco; Nicolini, Marcella; Piga, Claudio A.

In: Review of Economics and Statistics, Vol. 94, No. 4, 10.2015, p. 900-915.

Research output: Contribution to journalArticle

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