Value of a Platform to a Seller: Case of American Airlines and Online Travel Agencies

51 Pages Posted: 7 Sep 2013 Last revised: 19 Dec 2017

See all articles by Volodymyr Bilotkach

Volodymyr Bilotkach

Newcastle Business School

Nicholas G. Rupp

East Carolina University - Department of Economics

Vivek Pai

University of California, Irvine

Multiple version iconThere are 2 versions of this paper

Date Written: December 18, 2017

Abstract

We examine the financial consequences of a reseller excluding a certain supplier. The American Airlines dispute with Expedia and Orbitz provides a natural experiment, in which American Airlines travel options were suspended during the first and second quarters of 2011. We analyze price data for the first and second quarters of 2010 and 2011, employing a simple difference-in-differences identification strategy to evaluate changes in American Airlines’ domestic fares during the conflict. We find American Airlines domestic fares were lower than similar fares charged by its main competitors, with the effect most clearly pronounced on one-stop markets. We estimate the carrier’s revenue loss due to this conflict at $122 to $133 million. The long-term impact on American Airlines profit, however, is unclear because the carrier may have gained some bargaining power with Expedia and Orbitz.

Keywords: two-sided markets, value of platforms, online travel agents

JEL Classification: D4, L4, L93

Suggested Citation

Bilotkach, Volodymyr and Rupp, Nicholas G. and Pai, Vivek, Value of a Platform to a Seller: Case of American Airlines and Online Travel Agencies (December 18, 2017). Available at SSRN: https://ssrn.com/abstract=2321767 or http://dx.doi.org/10.2139/ssrn.2321767

Volodymyr Bilotkach

Newcastle Business School ( email )

208, City Campus East-1
Newcastle upon-Tyne, NE1 8ST
United Kingdom

Nicholas G. Rupp (Contact Author)

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States
252.328.6821 (Phone)
252.328.6743 (Fax)

HOME PAGE: http://myweb.ecu.edu/ruppn/

Vivek Pai

University of California, Irvine ( email )

Campus Drive
Irvine, CA 62697-3125
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
212
Abstract Views
1,743
rank
110,013
PlumX Metrics