Systematic peak-load pricing during holiday periods: Evidence from the U.S. airline industry

Alexander Luttmann and Alberto Gaggero

MPRA Paper from University Library of Munich, Germany

Abstract: When faced with capacity constraints, firms may moderate demand by increasing prices when demand is known to be high ex-ante (i.e., systematic peak-load pricing). In this article, we examine the extent and duration of systematic peak-load pricing in the days surrounding public holidays in the U.S. airline industry. Applying two-stage least squares techniques to a unique panel of over 18 million fares, we estimate travel premiums ranging from 4.3% to 83.1% in the days surrounding national holidays and from 2.7% to 34.7% in the days surrounding federal holidays. We also find that the duration of the peak-travel period is longer for national holidays and shorter for federal holidays. Examining heterogeneity in holiday peak-load pricing, we find some evidence that travel premiums during national holidays are larger on longer-distance routes, on routes to or from slot-controlled airports, on routes to leisure destinations, and on ultra-low-cost carriers.

Keywords: advance-purchase discounts; airline pricing; price discrimination; systematic peak-load pricing (search for similar items in EconPapers)
JEL-codes: D40 L11 L13 L93 R49 (search for similar items in EconPapers)
Date: 2024-12-24
New Economics Papers: this item is included in nep-com and nep-tre
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Published in Economics of Transportation 41 (2025): pp. 100395

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Journal Article: Systematic peak-load pricing during holiday periods: Evidence from the U.S. airline industry (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:124818

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