The Role of Competitor Pricing in Multiairport Choice

This paper investigates how competitors’ low-fare offerings in multi-airport regions influence the online search behavior of customers at a major carrier's website. Clickstream data from a major U.S. airline are combined with detailed information about competitors’ low-fare offerings for 10 directional markets. The use of a truncated negative binomial model allows the prediction of the number of searches on the carrier's website as a function of low-fare offerings for the same airport pair as well as for competing airport pairs in the region. The study finds that the number of searches decreases as the difference between the carrier's lowest fare and competitors’ lowest fare increases. However, trip characteristics have more impact on search behavior than do the fare variables. Overall search on the carrier's website is limited, with less than 5% of customers searching for fares across multiple airports. The findings provide insight into the role of competitor pricing on multiairport choice as it relates to customers’ online search behavior.