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|Title: ||A time series analysis of the pricing behaviour of directly competitive 'low-cost' airlines|
|Authors: ||Pitfield, D.E.|
|Issue Date: ||2005|
|Publisher: ||© La Nuova Italia|
|Citation: ||PITFIELD, D.E., 2005. A time series analysis of the pricing behaviour of directly competitive 'low-cost' airlines. International Journal of Transport Economics, 32 (1), pp. 15-39|
|Abstract: ||This paper, after providing an introduction to the operating context of low cost carriers in Europe,
examines the competitive pricing behaviour of airlines. Data is collected by route for cases where more
than one airline is in direct competition. Data on fares is obtained from the internet for two airlines with
competing services to Alicante, Prague and Malaga, departing from Nottingham East Midlands Airport in
the UK, for the six working weeks up to and including the actual departure. These destinations represent
leisure traffic. Two domestic business destinations were also selected to illustrate price competition on
business demand where departure times were within a maximum of 20 minutes of each other and a further
examination of competing services from London Gatwick (LGW) was made.
Cross Correlation Analysis is used to examine whether, subject to a variety of lags, the prices offered by
one airline can be seen to be both correlated with the other price series and to lead it. This provides some
insight into the pricing strategy adopted by the competitors.
Autocorrelation Functions (ACFs) and Partial Autocorrelation Functions (PACFs) can also be produced
on the prices offered by each airline. These suggest the nature of the ARIMA model that can be fitted to
the series and these models can show the degree to which series values are correlated with their own past
values and whether a reasonable model could be based on an ARIMA approach.
The relative strength of these two relationships is examined; are prices more closely explained by the
competitor's actions or the airlines own past price setting?|
|Description: ||This article was published in the journal, International Journal of Transport Economics [© La Nuova Italia] and is also available at: http://www.libraweb.net/sommari.php?chiave=67|
|Version: ||Accepted for publication|
|Appears in Collections:||Published Articles (Civil and Building Engineering)|
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