Combined Effects of Capacity and Time on Fares: Insights from the Yield Management of a Low-Cost Airline

Marco Alderighi (), Marcella Nicolini and Claudio Piga
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Marco Alderighi: Università della Valle d’Aosta

The Review of Economics and Statistics, 2015, vol. 97, issue 4, 900-915

Abstract: Based on two strands of theoretical research, this paper provides new evidence on how fares are jointly affected by in-flight seat availability and purchasing date. As capacity-based theories predict, it emerges that fares monotonically and substantially increase with flight occupancy. After controlling for capacity utilization, our analysis also supports time-based theories, indicating a U-shaped temporal profile over a two-month booking period, as well as a sharp increase in fares in the two weeks prior to departure.

Keywords: Pricing policy; Panel Data; Ryanair; Yield Management (search for similar items in EconPapers)
JEL-codes: D22 L11 L93 (search for similar items in EconPapers)
Date: 2015
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