18 Pages Posted: 1 Jan 2011
Date Written: November 23, 2010
We examine price dispersion in a large dataset of Australian domestic airfares. The airlines vary the lowest available fares on successive booking days by restricting the menu of available ticket types, and by changing the prices for some of those types. Our fixed-effects estimator allows us to characterise both of those mechanisms. The greatest price variation occurs on routes involving competition between the two main airlines, Qantas and Virgin; there is greater variation on monopoly routes than on routes pitting Virgin against the Qantas subsidiary, Jetstar. The lowest fares rise rapidly in the week before travel.
JEL Classification: L13, L93
Suggested Citation: Suggested Citation
de Roos, Nicolas and Mills, Gordon and Whelan, Stephen, Pricing Dynamics in the Australian Airline Market (November 23, 2010). Economic Record, Vol. 86, Issue 275, pp. 545-562, 2010. Available at SSRN: https://ssrn.com/abstract=1733403 or http://dx.doi.org/10.1111/j.1475-4932.2010.00653.x
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