HighlightsEstimate general substitution patterns and control for endogenous prices.Use an original data set with prices and characteristics of all available flights.Identify the carriers that face relatively greater competition.Our multi-airport metropolitan area can be grouped as a single market.Greater switching across carriers than across airports or departure times.

    AbstractThis paper uses the random-coefficients logit methodology that controls for potential endogeneity of prices and allows for general substitution patterns to estimate various demand systems. The estimation takes advantage of an original ticket-level revealed preference data set on travels from the New York City area to Toronto that contains prices and characteristics of not only flight choices but also of all non-booked alternative flights. Consistent with having higher valuations, our results show that travelers buying closer to departure have a higher utility of flying. Moreover, consumers’ heterogeneity decreases as the flight date nears. At the carrier level, we identify which carriers have more price-sensitive consumers and which carriers face greater competition. In addition, the results suggest that our multi-airport metropolitan area can be considered as a single market and that JFK and Newark are relatively closer substitutes. Overall, consumers are more willing to switch to alternative carriers than between airports or departure times.


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    Title :

    Airport, airline and departure time choice and substitution patterns: An empirical analysis


    Contributors:


    Publication date :

    2017-05-29


    Size :

    13 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English