Internet Penetration and Capacity Utilization in the US Airline Industry

James Dana and Eugene Orlov

American Economic Journal: Microeconomics, 2014, vol. 6, issue 4, 106-37

Abstract: Airline capacity utilization increased dramatically between 1993 and 2007, after staying fairly level following deregulation. We argue that consumers' use of the Internet to investigate and purchase airline tickets reduces market frictions and allows airlines to meet demand with less capacity and higher load factors. We find that differences in the rate of change of metropolitan area Internet penetration are positively correlated with differences in the rate of change of airlines' airport-pair load factors. Consistent with our explanation, this correlation is greater on flights in more competitive markets and on flights with fewer total passengers.

JEL-codes: L11 L86 L93 M15 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.4.106
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Citations: View citations in EconPapers (23)

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