Abstract
Deregulation of markets for air travel has led to increasing use of price based competition. However, comparison by buyers between competing airline offers is often difficult, with prices presented in a variety of inclusive and exclusive formats. The use of `99 ending' prices further seeks to undermine the capability of buyers to make rational decisions. This paper reports on a simulation study of buyers of short-haul airline tickets, and the choices made in response to four airline service/price offers. Just over three-quarters of respondents acted rationally by choosing an offer that provided the lowest price and/or highest benefits, consistent with respondents' expressed preferences. However, there was evidence of irrationality in the remaining respondents, who made choices that were inconsistent with their states preferences. Furthermore, there was a significant difference in respondents' choice between an offer priced at £61 99, and an otherwise identical offer priced at £62. The results of this study inform current debate about the need for clear and consistent pricing of airline tickets.
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