Airfares and Competition on International Routes

Abstract

This chapter uses airline data on fares, traffic, and flight characteristics to estimate a series of fare equations for international flights. The results are used to examine the role of international competition as a determinant of fares along international flights originating or departing from the United States. Findings suggest that actual and potential competition are important determinants of international airfares. We interpret these results as indicating that pricing behavior along US–international routes is consistent with the theory of imperfect contestability.

Citation

Bitzan, J., Kones, A. and Peoples, J. (2014), "Airfares and Competition on International Routes", The Economics of International Airline Transport (Advances in Airline Economics, Vol. 4), Emerald Group Publishing Limited, Leeds, pp. 151-176. https://doi.org/10.1108/S2212-160920140000004005