Estimating flight-level price elasticities using online airline data: A first step toward integrating pricing, demand, and revenue optimization

Mumbower, Stacey; Garrow, Laurie A.; Higgins, Matthew J.

doi:10.1016/j.tra.2014.05.003

Cited by 61 publications

(43 citation statements)

References 25 publications

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“…On such routes, "there is still considerable variation within market," resulting in being more elastic ones according to the IATA. Similar values of price-elasticity are also reported by Mumbower et al (2014) and Jung and Fujii (1976).…”

Section: Price Elasticitysupporting

confidence: 88%

Stated-preference analysis to estimate the domestic transport demand following the future entry of LCCs and the inauguration of the Linear Chuo Shinkansen in Japan

Gaku

Ono

Uehara

et al. 2015

Journal of Air Transport Management

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Section: Price Elasticitysupporting

confidence: 88%

Stated-preference analysis to estimate the domestic transport demand following the future entry of LCCs and the inauguration of the Linear Chuo Shinkansen in Japan

Gaku

Ono

Uehara

et al. 2015

Journal of Air Transport Management

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“…Since these quality attributes are likely correlated with the ticket's price, this will result in an underestimation of the price coefficient due to endogeneity. This effect has been reported, although at an aggregated level, by Mumbower, Garrow, and Higgins (2014).…”

Section: Introductionmentioning

confidence: 53%

Correcting for endogeneity due to omitted attributes in discrete-choice models: the multiple indicator solution

Guevara

Polanco

2016

Transportmetrica A: Transport Science

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Various transportation discrete-choice models suffer from endogeneity due to the omission of attributes that are relevant for the decision maker, but cannot be measured by the researcher. The control function (CF) method can be used to address this model flaw in discrete-choice models in which the problem occurs at the level of each alternative. However, the CF requires instrumental variables, which are difficult to obtain in various practical cases. In comparison, the multiple indicator solution (MIS) method does not require instruments, but indicators, which may be easier to gather in various circumstances. The MIS method has only been described so far for linear models. In this article, we show that MIS can be extended to discrete-choice modelling under mild assumptions. We also discuss the conditions under which it could be applied in practical transportation models estimated with revealed preference (RP) and stated preferences (SP) data where the source of endogeneity can be identified explicitly. We then use Monte Carlo experiments to illustrate the finite sample properties of MIS and CF. Results seem to suggest that MIS is robust to mild violations of modelling assumptions. We finally illustrate the application of the MIS method to an SP experiment of dwelling choice, showing that the MIS seems to have addressed successfully the omission of quality inferred from a picture. ARTICLE HISTORY

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“…A respectable number of most recent studies (e.g. Jung and Yoo 2014;Mumbower, Garrow and Higgins 2014;Narangajavana, Garrigos-Simon, García and Forgas-Coll 2014;Wang, Fan, Fu and Zhou 2014) discussed the impact of entry of low-fare carriers to the airline industry and airfares considering them as one of the most important indicators of passenger airline choice. In today's overwhelmingly increasing competitive environment, airlines recognize that price is not the only competitive weapon in the long run (Chang and Yeh 2002).…”

Section: Data Descriptionmentioning

confidence: 99%

Analyzing key socio-economic and socio-demographic drivers of domestic passengers’ airline choice behavior in Turkey using multinomial and mixed logit models

Yaylalı

Çelik

Dilek

2016

Transportation Letters

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Estimating flight-level price elasticities using online airline data: A first step toward integrating pricing, demand, and revenue optimization

Cited by 61 publications

References 25 publications

Stated-preference analysis to estimate the domestic transport demand following the future entry of LCCs and the inauguration of the Linear Chuo Shinkansen in Japan

Stated-preference analysis to estimate the domestic transport demand following the future entry of LCCs and the inauguration of the Linear Chuo Shinkansen in Japan

Correcting for endogeneity due to omitted attributes in discrete-choice models: the multiple indicator solution

Analyzing key socio-economic and socio-demographic drivers of domestic passengers’ airline choice behavior in Turkey using multinomial and mixed logit models

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