The impact of COVID-19 on airlines’ price curves

Chiara Morlotti and Renato Redondi

Journal of Air Transport Management, 2023, vol. 107, issue C

Abstract: COVID-19 has had a major negative impact on the travel industry, especially on the aviation sector. Along with travel restrictions to contain the spread of the virus, a drastic drop in demand—mainly caused by the decrease in the willingness to travel—has also been registered. This study explores the impact of COVID-19 on airline pricing curves, in terms of the price level, price dispersion, and the extent to which intertemporal price discrimination is applied. By analyzing all major European flights departing from and arriving in Italy, the results reveal a 31% overall decrease in airline price per kilometer. Additionally, price dispersion dropped, and price discrimination intensity was found to have decreased as a result of COVID-19. These outcomes can be explained in light of two major impacts of the pandemic on air travel demand, namely the variation in the passenger mix and travelers’ higher price sensitivity. Further analyses indicate that—along with other market and flight characteristics—market concentration, introduced interventions to prevent and control COVID-19, and airline- and destination-types play an important role in determining prices, price dispersion, and the price discrimination intensity.

Keywords: Passenger mix; Price dispersion; Price discrimination; Revenues; Pricing strategies (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969699722001478
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:107:y:2023:i:c:s0969699722001478

DOI: 10.1016/j.jairtraman.2022.102328

Access Statistics for this article

Journal of Air Transport Management is currently edited by Anne Graham

More articles in Journal of Air Transport Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().