Friday, February 8, 2013

Shop for Airline Tickets on Weekends

That is the advice from “Price Discrimination By Day-Of-Week Of Purchase: Evidence From The U.S. Airline Industry,” published in the Journal of Economic Behavior & Organization, Steven Puller and Lisa Taylor.
“We find that when you control for a large set of factors – the day-of-week of travel, whether the ticket was refundable, the number of days in advance that the ticket was purchased, how full the flights were, and other factors – that tickets purchased on the weekends were sold, on average, for a 5 percent discount,” Puller explains.

Now that this is publicized, will changes in purchasing behaviors make it disappear? There are a couple of reasons why not. First, since most consumers are not known for consulting academic journal articles before they shop, this information may not disseminate much. Second, it may not be worth it for business travelers to work on weekends just to get these price decreases.

4 comments:

  1. Shop for airline tickets on weekends is really an awesome idea. Thanks for providing informative post on buying airline tickets.

    ReplyDelete
  2. I’m not certain the things I could possibly have tried in the absence of those aspects shared by you about this area. Entirely was a real difficult concern in my circumstances, but taking note of a professional manner you managed it took me to cry with fulfillment. I am happy for your support and then have high hopes you find out what a great job your are doing training people using your web page. Most likely you’ve never met any of us.

    Cheap Flight Tickets

    ReplyDelete
  3. According to research by Puller and Taylor, when you control a large set of factors, air travel tickets purchased on weekends were sold on average for a 5% discount. In an attempt to maximize profits, airlines want to charge the higher prices to customers whose demand is more inelastic and lower prices to those whose demand is more elastic. In response to the Puller and Taylor suggestion that weekends offer discounts, the theory’s logic is that leisure travelers are most likely to choose an airline based on costs whereas a business traveler is more likely to choose an airline based on familiarity and comfort. According to a Borenstein and Rose study, business travelers tend to remain loyal to a particular airline and ignore lower fares offered by competitors, while leisure travelers are more apt to purchase tickets with lower fares regardless of brand. These findings spawned a new line of research in the airline literature that attempts to verify the existence of a negative relationship between concentration and price dispersion (Gerardi & Shapiro, 2007). Where price dispersion is the variation of prices among sellers of the same item, holding fixed the items characteristics; price discrimination is the practice of charging different prices to different buyers or groups of buyers based on differences in demand. Charging lower prices to low-value consumers means that you charge higher prices to high value consumers (Froeb, McCann, Shor, & Ward, 2014). Discounts on weekends could be considered an indirect price discrimination method where a business traveler could choose to take advantage of the discounted prices; however, the airlines are betting, based off research, that their demand is more inelastic compared to leisure travelers and they will use the discounted fares.

    Froeb, L. M., McCann, B. T., Shor, M., & Ward, M. R. (2014). Managerial Economics: A problem Solving Approach. United States of America: South-Western Cengage Learning.

    Gerardi, K., & Shapiro, A. H. (2007). Does Competition Reduce Price Discrimination? New Evidence from the Airline Industry. Research Review, (8), 8-11.

    ReplyDelete
  4. As weekend is coming and I am going to hill station with my friends. So, I am going to book flight tickets.

    ReplyDelete