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Price differences between domestic and international air markets: an empirical application to routes from Gran Canaria

Xavier Fageda, Juan Jiménez González () and Carlos Díaz Santamaría ()
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Carlos Díaz Santamaría: Faculty of Economics, University of Barcelona

No 201207, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: In this paper we examine whether airline prices on national routes are higher than those charged on international routes. Drawing on a database prepared specifically for this study, we estimate a pricing equation for all routes originating from Gran Canaria (Canary Islands, Spain), differentiating between national and international routes. A key difference between these two route types is that island residents benefit from discounts on domestic flights. When controlling for variables related to airline characteristics, market structure and demand, we find that national passengers who are non-residents on the islands are paying higher prices than international passengers.

Keywords: Air transport; discounts; prices. JEL classification: L93; H2; L13. (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012-03, Revised 2012-03
New Economics Papers: this item is included in nep-com, nep-tre, nep-tur and nep-ure
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Handle: RePEc:ira:wpaper:201207