Airline reservations systems: lessons from history
MIS Quarterly
Electronic markets and electronic hierarchies
Communications of the ACM
IEEE Annals of the History of Computing
Electronic Commerce Research and Applications
Designing online selling mechanisms: Transparency levels and prices
Decision Support Systems
How Information Changes Consumer Behavior and How Consumer Behavior Determines Corporate Strategy
Journal of Management Information Systems
Bootstrapping heteroskedastic regression models: wild bootstrap vs. pairs bootstrap
Computational Statistics & Data Analysis
Journal of Management Information Systems
Online and Offline Demand and Price Elasticities: Evidence from the Air Travel Industry
Information Systems Research
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Global distribution systems (GDSs) and online travel agencies (OTAs) have been providing critical intermediation services for the air travel services industry. Their systems services have eroded the airlines' revenue by encouraging consumers to do price comparison-based purchases though, which has caused the commoditization of air travel services. The airlines have begun to adopt a la carte pricing mechanisms in their direct distribution channel, especially through their Web sites. This way, they can provide travelers with an array of information for different airline product bundles and the flexibility to customize different bundles. This mechanism design may allow airlines to decommoditize their services in the minds of consumers. We analyze two years of data from a large international airline that sold airline tickets via several different direct and indirect distribution channels. Our results suggest that demand in the a la carte channel as a whole is less price-elastic. The results for price elasticity for different market segments and bundle types across channels were not altogether consistent with our predictions though. We find that, for some branded bundles of services, price elasticity is lower in the a la carte channel, and for others it is higher. We discuss the implications for managers and the design of a la carte selling mechanisms.