Service-quality and pricing strategies in the airline industry: The role of distance

Xavier Fageda and Ricardo Flores-Fillol

Economics of Transportation, 2024, vol. 40, issue C

Abstract: This paper analyzes airlines’ fare and frequency decisions, both theoretically and empirically. These decisions depend on route distance, as only short-haul routes are affected by intermodal competition from personal transportation. Although fares increase with distance both on short- and long-haul routes, the effect of distance on frequencies depends on the presence of intermodal competition. Frequencies decay with distance on long-haul routes. However, on short-haul routes, frequencies increase with distance because airlines try to boost profits by attracting demand from other transportation modes. Finally, on short-haul routes, intermodal competition from personal transportation affects more intensively network carriers than low-cost carriers as distance rises, which produces an increased differentiation between both types of airlines.

Keywords: Personal transportation; Service quality; Fares; Route distance; Network and low-cost carriers (search for similar items in EconPapers)
JEL-codes: L13 L2 L93 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:40:y:2024:i:c:s2212012224000406

DOI: 10.1016/j.ecotra.2024.100381

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