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

Marco Alderighi¹; Marcella Nicolini²; Claudio A. Piga³

¹ University of Aosta Valley · ² University of Pavia · ³ Keele University

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.

DOI

10.1162/rest_a_00451

Volume

97 (4)

Pages

900-915

Language

en

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BibTeX

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