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

• Autores: Xavier Fageda Sanjuan, Juan Luis Jiménez González, Carlos Díaz Santamaría
• Localización: Notas técnicas: [continuación de Documentos de Trabajo FUNCAS], ISSN-e 1988-8767, Nº. 655, 2011
• Idioma: inglés
• Enlaces
  • Texto completo
• Dialnet Métricas: 1 Cita
• Resumen

  • Some countries in European Union use air traveller�s subsidization policies to improve internal cohesion. Since 1989 Spain has implemented discount on fares to residents in regions far away mainland Spain (Canary Islands and Balearic) that nowadays (2011) are at 50% of final prices. Although this scheme a priori benefits consumers through lowering prices of flights to the mainland, we have examined whether subsidy incidence confirms this gain. Using a own elaborated data base for all routes from Gran Canaria we estimate a pricing equation using as explanatory factors variables related to airline characteristics, market structure and demand shifters at the route level. Our results show that there is a sort of price discrimination that may be against European Union rules because such is related to the nationality of passengers. Indeed, passengers from Spanish cities that fly to Gran Canaria and who are non-residents in the island are paying higher prices than passengers that come to the island from other European destinations.