Today’s internet-based distribution of tickets makes it easy for passengers to compare fares and book tickets from different airlines. At the same time, it allows airlines to assess competitors’ prices accurately and in real time. This project presents a method to support airline pricing strategies through the analysis of fares collected by the developed prototype.
On the route Frankfurt–New York City 54,000 nonstop fare quotes were collected to investigate the dynamics of price-setting behaviour as the departure date draws nearer. The method incorporates a descriptive analysis and a correlational research which are used to reveal patterns or other contiguities within the data set. The intertemporal profile of airlines suggests similar pricing strategies across airlines throughout the observation period. Airlines with lower market shares seem to follow the price-setting of airlines with higher market shares. This becomes particularly evident as the departure date approaches. Moreover, the correlational research carried out provides further evidence for competitive analysis in the airline industry as it reveals linear and non-linear correlations between most airlines.
Keywords: airfare, pricing strategies, price dispersion, fare analysis