Internet Penetration and Capacity Utilization in the US Airline Industry
- (pp. 106-37)
Abstract
Airline capacity utilization increased dramatically between 1993 and 2007, after staying fairly level following deregulation. We argue that consumers' use of the Internet to investigate and purchase airline tickets reduces market frictions and allows airlines to meet demand with less capacity and higher load factors. We find that differences in the rate of change of metropolitan area Internet penetration are positively correlated with differences in the rate of change of airlines' airport-pair load factors. Consistent with our explanation, this correlation is greater on flights in more competitive markets and on flights with fewer total passengers.Citation
Dana, James D. Jr., and Eugene Orlov. 2014. "Internet Penetration and Capacity Utilization in the US Airline Industry." American Economic Journal: Microeconomics, 6 (4): 106-37. DOI: 10.1257/mic.6.4.106Additional Materials
JEL Classification
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L86 Information and Internet Services; Computer Software
- L93 Air Transportation
- M15 IT Management
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