Flight Prices on the Internet<BR> Price Differences and Price Variability Between Intermediaries

The Internet as a virtual sales channel has affected price behaviour. One of the most widespread beliefs is that prices are lower on the Internet. This paper analyses the effect of the dynamic pricing strategies most commonly used on the Internet on price behaviour. More specifically, we consider the prices level and price dispersion between different intermediaries, namely those that only operate on the Internet, those that operate simultaneously both online and in travel agencies, and the airlines themselves, using the prices posted on their web pages. Results show that 'pure' Internet intermediaries offer lower prices, although variability is similar. © 2014 LSE and the University of Bath