Airline Fares Research Articles

Passenger Prefierences for Airline Fare Plans

This article segments the air travel market based on consumer preferences for various combinations of the common attributes associated with airline fare plans. It also explores the sensitivity of members of each market segment to changes in the levels of each of the air travel attributes. The study complements the work of Ritchie et al. published in a 1980 issue of the "Journal . "

Commodity Programs: Discussion

Some years ago, R. G. D. Allen was invited to the United States as a discussant of several papers on the subject of index numbers. Somewhat to the chagrin of his sponsors who had underwritten his transatlantic airline fare, his sole comment was to the effect that he had read the papers, was favorably impressed, and that the authors should continue their good work. I might best serve the purpose of this session by similar brevity! The two prepared papers deal with two important facets of contemporary agricultural policy issues: (a) instability and its sources, (b) the distribution of benefits flowing from commodity programs. Each confirms some generally held impressions; e.g., export variability was the dominant source of instability in total utilization of grains and oilseeds in recent years; the distribution of benefits of agricultural subsidies are unevenly distributed and tend to favor the relatively larger producer. Each contains some surprises, at least to my intuition; e.g., only recently has the need to undo certain consequences of abundance been used as an argument for intervention in commodity markets. Although the variability in aggregate net farm income has been sharply higher in the 1970s than in the 1960s, variability has not been appreciably higher in the latter half of the 1970s than in the two decades after World War II.

The welfare effects of airline fare deregulation

The welfare effects of airline fare deregulation

Who Has Benefited from Regulation of the Airline Industry?

THE notion that government regulation of a market or industry always serves the public interest has been questioned in the recent literature. George Stigler, in his pathbreaking article,' proposed that regulation is undertaken in response to demand by special interest groups and that it will serve the interests of the most powerful of these groups. He specifically suggests that an industry may seek regulation for its own benefit. The gains from regulation to the industry are derived from government's power to coerce and include direct money subsidies, control of entry, control of production of complements and substitutes, and control of market price. Sam Peltzman generalized this regulatory model,2 viewing the regulator as a political support maximizer, to examine how the benefits from regulation are divided among the competing groups. Two important extensions of the model were that: (i) in general, some benefits of regulation will go to all interest groups involved, even though one group may dominate in the gain; and (ii) as conditions in the market change over time, the distribution of gains may change with them. This paper examines the recent policies of the Civil Aeronautics Board (CAB) in their regulation of the airline industry in an attempt to determine who has benefited from it. Several earlier studies investigated the distribution of benefits from CAB regulation. William Jordan, from his study of the regulated and nonregulated airline fare structure in California in 1965,3 concluded that regulation resulted in excess capacity, thereby benefiting aircraft manufacturers, airline employees, and suppliers of airline services. He argued that industry profits were not being maximized due to imperfect cartel management by the CAB, and therefore that airlifle firms

Access, Fares, Frequency: Effects on Airport Traffic

The effects of airport access, and of airline fares and frequency, on the number of passengers using an airport are examined through a case study of the Texas intrastate air market. During the early 1970's, when Southwest Airlines engaged in fierce competition with other carriers and when Dallas/Fort Worth airport opened, major changes occurred in one factor while others remained constant. This context provides several special, quasi-experimental, situations which make it possible to identify the effects of each factor. The analysis confirms that: (1)Airport access can have an important impact on short haul air travel (the move by most carriers from close-in Dallas/Love to the more distant Dallas/Fort Worth airport led to a drop of about 12% in this traffic); (2)the fare elasticity is approximately one for this domestic traffic; and (3)relative frequency of flights is an important determinant of an airline's market share, according to an S-shaped relationship, except when significant price and locational factors intervene and dominate this phenomenon.

Chronology of Airline Fares and Flight Times, 1929-1974. Research and Economic Analysis Division, Department of Planning and Economic Development, State of Hawaii, Honolulu, Hawaii. June 18, 1974. 4p

Chronology of Airline Fares and Flight Times, 1929-1974. Research and Economic Analysis Division, Department of Planning and Economic Development, State of Hawaii, Honolulu, Hawaii. June 18, 1974. 4p

Practically Speaking: Transatlantic Travel Tips

It is the year of the tiger in China; the year of the bug in Washington; and, for the rest of the world, the year of the horse. (Mohammed's white steed of ascension, which lifted him to heaven, is now carrying the Arabs to billionaire statusand academics, along with other wage slaves, to the heights of inflation.) Putting aside tigers, bugs, and horses, the transatlantic travel season for the summer of 1974 poses some troublesome possibilities: higher prices, currency fluctuations, fuel shortages, and cancelled airline flights. Nevertheless, foreign travel remains particularly tempting to academics who can get away from it all for a full summer or, better still, for a sabbatical. Flying to overseas destinations is as simple as writing a check. First-class fares are stratospheric and not ordinarily subject to bargain prices, but tourist (or excursion) fares offer some relief for the budget-minded. To begin with, there is the regular one-way economy fare. A round trip is normally twice the amount of the one-way fare. This is valid for a full yearbut it is relatively expensive. The International Air Transport Association (I ATA), the international airlines' organization which fixes fares ( subject to the paranoia of the U.S. Civil Aeronautics Board), has created a strange system of financial penalties for all who stray from the prescribed time limits. Consider the following: a reduction (over twice the one-way fare) is made for those who remain abroad not less than 14 days but not more than 21 days. A greater reduction is made for the 22to 45-day traveler. (Why?) But many academics plan trips longer than 45 days, and they must pay the highest fare of all: twice the one-way fare, which is higher than either the 14-21or 22-45-day excursion fares. Charter flights for specialized organizations are a money-saving possibility. They usually return within a month of departure and are relatively inexpensive. But beware charters sponsored by quasi-mythical organizations; they are subject to governmental crackdowns, and cancelled flights may result. It isn't unusual to see an 80-year-old at an airport, ready to fly as a member of an Alpine ski club. If the unreliability of charter flights puts you off, consider a flight to Europe on Icelandic, the only transatlantic airline that isn't a member of the regulatory I ATA. Flights aboard Icelandic are likely to be informal (you may rub shoulders with students), fatiguing, herbivorous, and totally lacking in privacy-but they are cheaper. Airline fares are expected to rise by 10 percent in the near future, so the following figures may be outdated upon publication. However, they offer a comparative guide to peak season fares (eastbound: June, July, August; westbound: July, August, September). Icelandic charges $494 for a round trip, a $222 savings over the I ATA fare of $716. But your arrival point will be Luxembourg (pleasant and rather tame), and the cost of transportation to your desired destination diminishes the savings somewhat. One miscellaneous pointer: If you're flying to London (for example), and contemplate (for example again) a trip to Greece, see a London travel agent, who often has super-bargain charter fares on flights to Greece (not subject to I ATA regulations). Passenger ship and freighter travel are attractive alternatives to flying, but neither is inexpensive. While days at

The Civil Aviation Authority and the user

Users generally believe that the modern aeroplane can fly on its own wings economically. They see ordinary commercial competition in the European charter market: and in spite of the low prices that have resulted, they see that several of the UK charter operators have made very respectable profits. Sir Sefton Brancker told us that “healthy competition is the only sure preventive to inefficiency, slackness and dishonesty”—and some of us believe he might agree now that air transport is no longer an exception. Within California, by a unique regulatory quirk, the establishment airline fares have been nearly halved by competition; and yet specialist airlines have made profits. Users see also that three of the major American airlines which stood high in your Committee's productivity league, were each able to shed over 5000 employees when financial stress forced management to cut costs. In the present climate here, it may be that the Authority will find that its statutory duty to reward only efficient operators with an economic return may cause some painful problems, notably on the domestic trunk routes, where competition has exposed massive differences in cost levels.