4단계 BK21 산업경영공학교육연구단 해외석학초빙 세미나
■ 일정
- 일시: 2022.01.21.(금) 14:00 - 16:00
- 연사: Tim Huh 교수(University of British Columbia)
- 주제: Hidden-City Travel and Its Impact on Airfare: The Case with Competing Airlines
■ 내용
Hidden-city pricing is an anomaly in airline pricing where a direct flight from A to B is more expensive than a multi-leg flight from A to B and B to C. In this case, customers wanting to travel from A to B may consider purchasing the connecting flight from A to C, deplane in B, and throw away the second leg of the itinerary. This practice is called hidden-city ticketing. We study hidden-city ticketing and airfare pricing in a setting where two airlines compete on a hub-and-spoke airline network. We find that hidden-city pricing arises when an airline lowers the price of its indirect flight to compete with the competitor’s direct flight on the same route. We also show that when more than a certain proportion of customers in the market start practicing hidden-city ticketing, airlines will essentially become monopolies on the direct route to their hubs, and the customer surplus becomes fully extracted. As more customers look for hidden-city tickets, the airfare that airlines can charge increases. Joint work with Jaelynn Oh (University of Utah).