On-line Booking and Revenue Management: Evidence from a Low-Cost Airline

Abstract

Using unique data on a low-cost airline posted prices and seat availability, this study sheds some light on whether the airline’s actual practice of yield management techniques conforms with some predictions from economic models of peak-load pricing under demand uncertainty. On the one hand, robust support is found to the notion that prices increase as the seat availability decreases; on the other, theoretical models that do not account for stochastic peak-load pricing fail to capture an important source of dispersion in the data.