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Article
Combined Effects of Capacity and Time on Fares: Insights from the Yield Management of a Low-Cost Airline
Review of Economics and Statistics (2015)
  • Claudio A G Piga, Keele University
  • Marco Alderighi
  • Marcella Nicolini
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 the 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.

Publication Date
2015
Citation Information
Claudio A G Piga, Marco Alderighi and Marcella Nicolini. "Combined Effects of Capacity and Time on Fares: Insights from the Yield Management of a Low-Cost Airline" Review of Economics and Statistics Vol. Forthcoming (2015)
Available at: http://works.bepress.com/claudiopiga/32/