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- 6.4.1. Correlation Between Demand, Prices, and Advance Booking
- 6.4.2. Correlation Between Demand, Prices, and Departure Day of Week
- 6.4.3. Correlation Between Demand, Prices, and Departure Time of Day
- 6.4.4. Correlation Between Demand, Prices, and Booking Day of Week
- 6.4.5. Promotions, Sales, and Holidays
6.4. Descriptive StatisticsThe level of observation is the number of daily bookings at the flight-level. In the sample, we observe between 0 and 16 bookings per flight per day, with a mean of 1.9 bookings and a median of 1 booking25. Demand and prices are observed to vary based on several factors, such as advance booking, departure day of week, departure time of day, booking day of week, during promotional sales of low cost competitor Virgin America, and during Labor Day Holiday. The next several sections take a closer look at how average prices and average demand are influenced by these variables. 6.4.1. Correlation Between Demand, Prices, and Advance BookingAs the flight departure date approaches, average prices are observed to increase, which is typical in the airline industry due to revenue management practices. Additionally, average demand increases as the date of departure draws nearer. This means that when prices are high, demand is also high. This relationship is demonstrated in Figure 6.1. Table 6.5 shows the correlation between average bookings, average prices and days from departure (DFD). Looking at the correlation coefficients also shows moderate to high correlations between these variables. As the day of flight departure approaches, average prices increase, with a correlation coefficient of -0.76. As the flight departure date approaches, average bookings increase, with a correlation coefficient of -0.56. We observe higher demand for higher prices, with a correlation coefficient of 0.52. Table 6.5: Average Bookings, Average Price and DFD Correlation Coefficients
Note: DFD= Days from departure Figure 6.1: Average Daily Demand and Prices as a Function of Days from Departure 6.4.2. Correlation Between Demand, Prices, and Departure Day of WeekAverage daily demand and average prices are observed to differ by a flight’s departure day of week, as shown in Figure 6.2. Looking at the figure seems to show an inverse relationship between average prices and demand. Departures on Saturdays have the lowest prices, and departures on Mondays have the highest prices. This is intuitive, as many leisure travelers travel on Saturdays, whereas many business travelers pay travel on Mondays. Figure 6.2: Average Daily Demand and Prices as a Function of Departure Day of Week 6.4.3. Correlation Between Demand, Prices, and Departure Time of DayAverage daily demand and average prices are also observed to differ by a flight’s departure time of day, as shown in Figure 6.3. Flights departing at 10am and 5pm have the highest average prices but also have some of the lower average demands. Flights departing at 7am have one of the lower average prices, but also have the highest observed average demand. Once again, looking Figure 6.3 seems to show an inverse relationship between average prices and demand for many of the departure times. Figure 6.3: Average Daily Demand and Average Prices as a Function of Departure Time of Day 6.4.4. Correlation Between Demand, Prices, and Booking Day of WeekAverage daily demand and average prices are also observed to differ by booking day of week, as shown in Figure 6.4. The figure shows that prices stay relatively constant for each booking day of the week (with a range of only $215-$258), which makes sense. Airlines generally do not charge significantly higher or lower prices for booking a flight on a Saturday versus on a Monday. The price differences would be expected to vary more by DFD and departure day of week. Although prices are observed to stay relatively constant for each booking day of the week, there does seem to be a difference in average demand. The figure seems to show that significantly fewer tickets are sold on Saturdays and Sundays as compared to weekdays. Figure 6.4: Average Daily Demand and Average Prices as a Function of Booking Day of Week 6.4.5. Promotions, Sales, and HolidaysDuring the time of data collection, low cost competitor Virgin America had three promotional sales. Promotional sales were identified from both the Virgin America website and from Travelzoo® emails. As an example, one sale included a largely advertised three day system-wide fare sale when Virgin America announced plans to launch new service to Los Cabos and Cancun, Mexico. Virgin America teamed with Loopt® to offer customers a special promotion if they checked-in (with the free Loopt® Star App on their iPhone) at SFO, LAX or one of Virgin America’s mobile taco truck locations during a four hour time period. Customers could get a $1 two-for-one taco deal along with a two-for-one ticket offer valid on Virgin America’s new flights to Los Cabos and Cancun (Virgin America, August 31, 2010). Virgin America is quoted as saying “….significant online buzz circulating about the promotion, helped make it the fifth highest sales day” in Virgin America’s history (Arrington, 2010). The data shows a significant decrease in JetBlue bookings during Virgin America’s promotional sales. We control for Virgin America promotions by introducing dummy variables into the following models for bookings made during the sale dates. During the time of data collection, there was one holiday. Labor Day holiday was observed on Monday, September 6, 2010. We control for the holiday by introducing dummy variables for bookings made for flights departing on Labor Day (September 6) and the day after Labor Day (September 7). Directory: bitstream -> handle -> 1853 handle -> The Economics of Technology Sharing: Open Source and Beyond Josh Lerner and Jean Tirole handle -> The Rise of Digital Curation and Cyberinfrastructure: From Experimentation to Implementation, and Maybe Integration handle -> Mobile augmented reality applications for library services handle -> Libraries, Archives, and Museums as Epistemic Infrastructure1 Download 1.47 Mb. Share with your friends:
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