The Hidden Side of Dynamic Pricing in Airline Markets

Thu, 15 Sep 2016 14:26:00 BST

Quantitative Analysis of Business, Economics and Finance Research Group Seminar

Date: Wed 28 Sep 2016
Time: 13:15
Room: BSG/20

Speaker: Prof. Claudio Piga

All staff and student welcome

An often disregarded, but central, aspect of the airline pricing's problem consists in setting a price for all the seats on the plane. We show this is what a leading European airline does in practice in all its routes, and that such an approach is consistent with one of the main predictions from the theoretical model we present. Another is that over time the distribution of prices should move downward to reflect the perishable nature of a flight's seats: this theoretical prediction also finds strong empirical support. Interestingly, due to the increasing profile of the price distribution across seats, we find that the price observed by prospective buyers tends to increase as the date of departure nears.

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