Airline Pricing, Price Dispersion, and Ticket Characteristics On and Off the Internet

This paper uses transaction data to investigate the effects of Internet purchase on airline fares. Our data include ticket characteristics, restrictions, flight load factors, and dates and channel of purchase. Controlling for ticket and flight characteristics, online purchasers pay about 11 percent less than offline purchasers, which seems rooted in more efficient shopping. The results do not support a spillover in terms of reduced fares or dispersion from greater Internet shopping. The paper also uses the data to reevaluate the relationship between market concentration and fares, but fails to identify any statistically significant, robust relationship.