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MBAA 523

Written Assignment 3: Airline Pricing Research Assignment

This assignment is designed to show how the economic concept of price discrimination is implemented in the airline industry and reflected in airline pricing. To obtain some limited price data, choose any city-pair and two competing airlines. A network and low-cost-carrier make an interesting comparison, but any airlines of interest are acceptable. For each airline, obtain the 4 prices for a typical round-trip itinerary with bookings 1 day in advance, and then for 1, 2 and 4 weeks in advance of the departure date. Itineraries with closer departure dates are more likely to be purchased by business travelers. Leisure travelers, on the other hand, usually book well in advance of the travel date.

To isolate the effects of advance purchase, the itineraries should depart and return the same days of the week at approximately the same times of day. Try to avoid the influence of holidays or other seasonal effects on demand. Use the airlines’ websites for all fare information.

In a short paper, first explain the theory of 3rddegree price discrimination as it applies to the airline industry including a graphical model. Explain how and why airlines would choose to practice price discrimination. Next, discuss your research methodology including the choice of airlines, the itinerary, and source data. Then, present the data. A simple table may be the best method for showing the itineraries and fares. Finally, discuss whether the data provide evidence of price discrimination. Draw appropriate conclusions.

There is no page limit, but 3 to 4 pages not including the title page, reference page, and any appendices, should be sufficient. Incorporate the standard elements of APA style including running head, page numbers, headings, citations, and references.

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MBAA 523

Written Assignment Standards

The standards for written assignments are as follows. These standards will apply to all written assignments, unless otherwise indicated.

• Submit an original paper (one written by the student that has not been previously submitted to fulfill a requirement for another course).

• Apply APA style rules; use the current edition of the APA publication manual for guidelines. These rules affect any tables or charts, citations, references, running head, page numbers, and section headings.

• Provide a title page containing the name of course, title of paper, name of author, and date.

• Include a references page, if applicable, formatted to APA style requirements.

• Observe written assignment formatting requirements: Times New Roman font, 12-pt font size, double-spaced text, with numbered pages.

• The paper must be grammatically sound and free of spelling errors. See the Resources area in the course for helpful writing skills websites.

• Save your document as one of the following acceptable file types: .doc, .docx, or

.rtf.

• If specified, adhere to the minimum/maximum page number requirements as given in each assignment. Do not count the title page or the references page(s) as part of the minimum total.

• You will be required to use quality resources. Typically, this means that you should primarily use peer-reviewed journal articles. Note: If using a website as a reference source, use only quality material. For guidance, see Tips for Evaluating Websites from ERAU’s Hunt Library.

Additionally, review the evaluation rubric provided with each written assignment activity for details on grading criteria.