We investigate the effect of competition on price dispersion in the airline industry. Using panel data from 1993 to 2008, we find a non-monotonic effect of competition on price dispersion. An increase in competition is associated with greater price dispersion in concentrated markets but is...

Major airlines rely on fuel hedging to manage risk of volatile fuel prices. We show that fuel hedging leads to lump sum gain or loss, which does not affect airlines' purchase cost of fuel (variable cost), but is incorporated into the reported airline fuel costs. Our estimation results suggest...

In 2010, Spirit airlines announced that it would start charging passengers for carry-on baggage. Using a vector of route level characteristics, we construct a matched group consisting of routes which best match those served by Spirit (treated group). We then run a diff-in-diff estimation using...

Consumer heterogeneity drives airlines to compete with each other through product lines, in the form of different flights and different ticket policies (e.g., change fee) on the same flight. Using ticket level data from a major Chinese online provider of travel services, we explore airlines'...