The determinants of hidden-city ticketing: Competition, hub-and-spoke networks, and advance-purchase requirements

Alberto Gaggero and Alexander Luttmann

Transportation Research Part E: Logistics and Transportation Review, 2023, vol. 173, issue C

Abstract: We offer a comprehensive empirical study on hidden-city ticketing (HCT), a pricing phenomenon in the airline industry that occurs when the fare for a nonstop trip from A to B is more expensive than a connecting trip from A to B and B to C. Exploiting a unique panel of over 473 thousand fares for flights departing between October 1st, 2019 and December 31st, 2019, we find that HCT depends on route competition (both on A–B and A–C routes), largely occurs in the last week to departure, is less likely when airport C is a hub, and primarily occurs on carriers that operate large hub-and-spoke networks (e.g., American, Delta, and United).

Keywords: Advance-purchase; Airline pricing; Competition; Hidden-city ticketing; Hub airports; Price discrimination (search for similar items in EconPapers)
JEL-codes: D40 L11 L13 L93 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: Discount opportunities in hub-and-spoke networks: The determinants of hidden-city ticketing (2022)
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DOI: 10.1016/j.tre.2023.103086

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