Analysis of ticket price in the airline industry from the perspective of operating costs, supply and demand

Abstract

This study provides an analysis of airline ticket price and its determinants, such as operating costs, supply and demand. The research aimed to establish the relationship between ticket price and these influencing variables, using a correlation method to verify their effect. A linear regression model was developed using the least squares method to explain whether a causal relationship exists between the variables. The results show that, although a relationship does exist between airline ticket price and operating costs, it is overshadowed by the fact that the main determinant of pricing is explained by the relationship between supply and demand.*******************************************************************************************************************Preços de passagens aéreas analisados sob a perspectiva dos custos operacionais, oferta e demanda resumo Este estudo fornece uma análise do preço do bilhete de avião e seus determinantes, tais como os custos operacionais, a oferta e a demanda. O objetivo desta pesquisa consiste em determinar qual é a relação entre o preço do bilhete, o que a determina e qual destas variáveis a afetam, usando um método de correlação. Um modelo de regressão linear foi elaborado usando o método dos mínimos quadrados para explicar se existe uma relação causal entre as variáveis. Os resultados mostram que, apesar de existir uma relação entre o custo dos bilhetes de avião e os custos operacionais, essa relação é ofuscada devido ao fato de que o principal determinante do preço do bilhete é explicado pela relação entre a oferta e a demanda.Palavras-chave: indústria aérea; custos; demanda; preço.

Pricing and demand management of air tickets using a multiplicative newsvendor model

“…Aside from revenue maximization, cost reduction is a very important profit maximization factor that must be addressed by breaking down the airline non-fixed cost into operating and non-operating costs (Alves and Caetano 2016 ). The classification of costs can help airlines prioritize the costs constituents, which if reduced, will lead to a significant reduction in the flight seat cost.…”