Economics and Finance Faculty Publications and Presentations
Document Type
Article
Publication Date
9-2017
Abstract
This paper uses the random-coefficients logit methodology that controls for potential endogeneity of prices and allows for general substitution patterns to estimate various demand systems. The estimation takes advantage of an original ticket-level revealed preference data set on travels from the New York City area to Toronto that contains prices and characteristics of not only flight choices but also of all non-booked alternative flights. Consistent with having higher valuations, our results show that travelers buying closer to departure have a higher utility of flying. Moreover, consumers’ heterogeneity decreases as the flight date nears. At the carrier level, we identify which carriers have more price-sensitive consumers and which carriers face greater competition. In addition, the results suggest that our multi-airport metropolitan area can be considered as a single market and that JFK and Newark are relatively closer substitutes. Overall, consumers are more willing to switch to alternative carriers than between airports or departure times.
Highlights
• Estimate general substitution patterns and control for endogenous prices.
• Use an original data set with prices and characteristics of all available flights.
• Identify the carriers that face relatively greater competition.
• Our multi-airport metropolitan area can be grouped as a single market.
• Greater switching across carriers than across airports or departure times.
Recommended Citation
Escobari, Diego. "Airport, airline and departure time choice and substitution patterns: An empirical analysis." Transportation Research Part A: Policy and Practice 103 (2017): 198-210. https://doi.org/10.1016/j.tra.2017.05.034
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Publication Title
Transportation Research Part A: Policy and Practice
DOI
10.1016/j.tra.2017.05.034
Comments
Original published version available at https://doi.org/10.1016/j.tra.2017.05.034