This research analyses airlines' pricing decisions in response to changes in the market conditions. We estimate the effects of jet fuel price changes on European airfares at airline/route level by discriminating on the grounds of supplied capacity and markets’ competitive structure. Our results show that airlines tend to adjust fares asymmetrically following a “rocket and feather” behaviour. The asymmetric pricing is marked in periods of decreasing capacity when the increases of fuel price are passed at a higher degree than fuel cost savings. In contrast, when capacity increases the asymmetry is lowered. Moreover, we show that highly competitive markets are characterized by a lower price asymmetry compared to low competition markets. Finally, our results show that airline price asymmetry reaches its maximum when capacity is reduced and competition is low.

(2018). Price asymmetries in European airfares [journal article - articolo]. In ECONOMICS OF TRANSPORTATION. Retrieved from http://hdl.handle.net/10446/119501

Price asymmetries in European airfares

Scotti, Davide;Volta, Nicola
2018-01-01

Abstract

This research analyses airlines' pricing decisions in response to changes in the market conditions. We estimate the effects of jet fuel price changes on European airfares at airline/route level by discriminating on the grounds of supplied capacity and markets’ competitive structure. Our results show that airlines tend to adjust fares asymmetrically following a “rocket and feather” behaviour. The asymmetric pricing is marked in periods of decreasing capacity when the increases of fuel price are passed at a higher degree than fuel cost savings. In contrast, when capacity increases the asymmetry is lowered. Moreover, we show that highly competitive markets are characterized by a lower price asymmetry compared to low competition markets. Finally, our results show that airline price asymmetry reaches its maximum when capacity is reduced and competition is low.
articolo
2018
Scotti, Davide; Volta, Nicola
(2018). Price asymmetries in European airfares [journal article - articolo]. In ECONOMICS OF TRANSPORTATION. Retrieved from http://hdl.handle.net/10446/119501
File allegato/i alla scheda:
File Dimensione del file Formato  
2018_Scotti_Volta_ECOTRA.pdf

Solo gestori di archivio

Versione: publisher's version - versione editoriale
Licenza: Licenza default Aisberg
Dimensione del file 900.32 kB
Formato Adobe PDF
900.32 kB Adobe PDF   Visualizza/Apri
Pubblicazioni consigliate

Aisberg ©2008 Servizi bibliotecari, Università degli studi di Bergamo | Terms of use/Condizioni di utilizzo

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/119501
Citazioni
  • Scopus 14
  • ???jsp.display-item.citation.isi??? 13
social impact