Air Travel Demand and Pricing Behavior

Airline industry has played an important role in transporting passengers in the U.S. In terms of the number of passengers, air service recorded the largest market share among the for-hire passenger transportation services in 2004. This study addresses three important issues in the U.S. airline industry: demand, pricing behaviors, and carrier's price strategies. The first essay discusses the demand for U.S. air-passenger service by employing macro and micro demand models. The second essay focuses on pricing behaviors of the U.S. air carriers. Using estimated airfares, major determinants of airfares are evaluated. Finally, the third essay extends the price model of air-passenger service by categorizing carriers' price strategies.