Airline Demand Functions in the North Atlantic and their Pricing Implications

Airline Demand Functions in the North Atlantic and their Pricing Implications

The author finds that airline demand is price elastic except for first class. Obstacles to competition and to adjustments of capacity are political rather than economic. He suggests that fares should be based on long-run marginal cost, and reductions should be made only for off-peak travel, density of route, advance payment, and unrestricted group bookings.

Share Content

Facebook
Twitter
LinkedIn

Related Articles

Optimal Public transport Price and Service Frequency

Because values of time and passenger behaviour depend on the level of frequency it is found that: (1) in urban public transport there may be one low-deficit local optimum and one high-deficit local optimum, one of which is global; (2) contrary to what might be expected, optimal financial deficit per passenger is typically larger for high frequency services than for low-frequency services; (3) the optimal off-peak may exceed the optimal peak price.

View Journal »