An exploratory study of price movements along booking profiles in the airline industry in the Indian domestic market

Abstract

In this paper, we analyse the price movements of the Indian domestic airline industry. In the first part, we conduct a detailed econometric analysis of five selected domestic routes. In the second part, we study the effect of time interval (of the day of booking to day of departure) and the weekend effect on the average airfare. Our exploratory research suggests that, on the same route in the same time window, there is strong positive correlation among the prices of different airlines in most of the cases. It also shows that the price competition steps up airfares as the departure date comes closer and weekend airfares are higher than weekday airfares. The application of revenue management and dynamic pricing (RMDP) strategy is a common practice in the Indian domestic airline industry.