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

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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.

Citation

(2015). Combined Effects of Capacity and Time on Fares: Insights from the Yield Management of a Low-Cost Airline. Review of Economics and Statistics, 900-915. https://doi.org/10.1162/REST_a_00451

Acceptance Date Feb 13, 2014
Publication Date Sep 28, 2015
Journal Review of Economics and Statistics
Print ISSN 0034-6535
Publisher Massachusetts Institute of Technology Press
Pages 900-915
DOI https://doi.org/10.1162/REST_a_00451
Keywords pricing policy, panel data, Ryanair, yield management
Publisher URL https://doi.org/10.1162/REST_a_00451

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