The effect of the economic crisis on the behaviour of airline ticket prices. A case-study analysis of the New York–Madrid route

Abstract

The effect of external factors such as the economic situation on airline ticket price behaviour has not been examined in the specialised literature. In this paper, we analyse the effect of the economic crisis on the behaviour of the prices offered via several types of intermediaries over time. We chose to examine the Madrid–New York route because of its high demand which provides us with a sufficient number of flights and it is used for both business and leisure trips. We used round-trip fares posted on-line, from two months prior to departure, in order to replicate real travellers’ behaviour when making reservations. We chose flights in 2009 and 2013 departing on 18th June and returning eight days later on 26th June, in order to avoid peak holiday times. The results show that the economic crisis has affected price behaviour both in terms of price level and dispersion, with a clear increase in price level and decrease in price dispersion. Moreover, the economic crisis has reduced the usual marked increase in average price that takes place as the flight departure date approaches.