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“Price differences between domestic and international air markets: an empirical application to routes from Gran Canaria”

Author

Listed:
  • Xavier Fageda

    (Faculty of Economics, University of Barcelona)

  • Juan Luis Jiménez

    (Department of Applied Economic Analysis. University of Las Palmas de Gran Canaria)

  • Carlos Díaz Santamaría

    (Faculty of Economics, University of Barcelona)

Abstract

In this paper we examine whether airline prices on national routes are higher than those charged on international routes. Drawing on a database prepared specifically for this study, we estimate a pricing equation for all routes originating from Gran Canaria (Canary Islands, Spain), differentiating between national and international routes. A key difference between these two route types is that island residents benefit from discounts on domestic flights. When controlling for variables related to airline characteristics, market structure and demand, we find that national passengers who are non-residents on the islands are paying higher prices than international passengers.

Suggested Citation

  • Xavier Fageda & Juan Luis Jiménez & Carlos Díaz Santamaría, 2012. "“Price differences between domestic and international air markets: an empirical application to routes from Gran Canaria”," IREA Working Papers 201207, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.
    • Handle: RePEc:ira:wpaper:201207
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    File URL: http://www.ub.edu/irea/working_papers/2012/201207.pdf
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    References listed on IDEAS

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    1. Williams, George & Pagliari, Romano, 2004. "A comparative analysis of the application and use of public service obligations in air transport within the EU," Transport Policy, Elsevier, vol. 11(1), pages 55-66, January.
    2. George Williams, 2005. "European Experience with Direct Subsidization of Air Services," Public Money & Management, Taylor & Francis Journals, vol. 25(3), pages 155-161, June.
    3. Santana, Isabel, 2009. "Do Public Service Obligations hamper the cost competitiveness of regional airlines?," Journal of Air Transport Management, Elsevier, vol. 15(6), pages 344-349.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Air transport; discounts; prices. JEL classification: L93; H2; L13.;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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