PRICE DIVERSITY IN THE INTRA-EUROPEAN AIR TRANSPORTATION MARKET: AN EMPIRICAL ANALYSIS

Abstract

Since the nineties, the strong competition between airlines companies’ increases and price seems to be a determining variable. Consumers have become more demanding and more price-sensitive. In addition to these elements, competition between full service and low cost companies constrain firms’ strategy. Various elements have been determined in the literature as price dispersion boosters in the airline industry. This research seeks to contribute to the study of price dispersion in Europe, by collecting prices from various airlines competing in two European routes. The results suggest the confirmation of the conclusions Lijersen and Voort (2011) study. It is noted that the dispersion of prices is more related to the inequality of market shares than to market concentration, both being conditioned by offer strategy differentiation between full service and low cost.