Airline Pricing Research

This assignment is designed to show how the economic concept of price discrimination isimplemented in the airline industry and reflected in airline pricing. To obtain some limited pricedata, choose any city-pair and two competing airlines. A network and low-cost-carrier make aninteresting comparison, but any airlines of interest are acceptable. For each airline, obtain the 4prices for a typical round-trip itinerary with bookings 1 day in advance, and then for 1, 2 and 4weeks in advance of the departure date. Itineraries with closer departure dates are more likelyto be purchased by business travelers. Leisure travelers, on the other hand, usually book well inadvance of the travel date.To isolate the effects of advance purchase, the itineraries should depart and return the samedays of the week at approximately the same times of day. Try to avoid the influence of holidaysor other seasonal effects on demand. Use the airlinesí websites for all fare information.In a short paper, first explain the theory of 3rd degree price discrimination as it applies to theairline industry including a graphical model. Explain how and why airlines would choose topractice price discrimination. Next, discuss your research methodology including the choice ofairlines, the itinerary, and source data. Then, present the data. A simple table may be the bestmethod for showing the itineraries and fares. Finally, discuss whether the data provide evidenceof price discrimination. Draw appropriate conclusions.There is no page limit, but 3 to 4 pages not including the title page, reference page, and anyappendices, should be sufficient. Incorporate the standard elements of APA style includingrunning head, page numbers, headings, citations, and references.

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