The effect of vertical product differentiation on fare and market share: Evidence from Delta Air Lines’ middle seat policy

Max J. Hyman; Ian Savage

doi:10.1016/j.ecotra.2022.100274

The effect of vertical product differentiation on fare and market share: Evidence from Delta Air Lines’ middle seat policy

Max J. Hyman, Ian Savage^*

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

Delta Air Lines engaged in vertical product differentiation during the COVID-19 pandemic. To ensure that passengers did not sit next to a stranger, Delta did not sell the middle seat on its flights that had them. Its principal rivals, American Airlines and United Airlines, sold all seats. Analysis of the non-stop routes on which Delta faced head-to-head competition with American or United reveals that Delta was able to charge a 10% fare premium and increase its relative market share by 4.7 percentage points from its middle seat policy.

Original language	English (US)
Article number	100274
Journal	Economics of Transportation
Volume	31
DOIs	https://doi.org/10.1016/j.ecotra.2022.100274
State	Published - Sep 2022

Keywords

Aviation
Pandemic
Vertical product differentiation

ASJC Scopus subject areas

Transportation
Economics, Econometrics and Finance (miscellaneous)

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10.1016/j.ecotra.2022.100274

Cite this

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title = "The effect of vertical product differentiation on fare and market share: Evidence from Delta Air Lines{\textquoteright} middle seat policy",

abstract = "Delta Air Lines engaged in vertical product differentiation during the COVID-19 pandemic. To ensure that passengers did not sit next to a stranger, Delta did not sell the middle seat on its flights that had them. Its principal rivals, American Airlines and United Airlines, sold all seats. Analysis of the non-stop routes on which Delta faced head-to-head competition with American or United reveals that Delta was able to charge a 10% fare premium and increase its relative market share by 4.7 percentage points from its middle seat policy.",

keywords = "Aviation, Pandemic, Vertical product differentiation",

author = "Hyman, {Max J.} and Ian Savage",

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N1 - Funding Information: We would like to thank the Co-Editor, Philippe Gagnepain, and two anonymous referees for helpful comments that made this a better paper. Publisher Copyright: © 2022 Elsevier Ltd

PY - 2022/9

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N2 - Delta Air Lines engaged in vertical product differentiation during the COVID-19 pandemic. To ensure that passengers did not sit next to a stranger, Delta did not sell the middle seat on its flights that had them. Its principal rivals, American Airlines and United Airlines, sold all seats. Analysis of the non-stop routes on which Delta faced head-to-head competition with American or United reveals that Delta was able to charge a 10% fare premium and increase its relative market share by 4.7 percentage points from its middle seat policy.

AB - Delta Air Lines engaged in vertical product differentiation during the COVID-19 pandemic. To ensure that passengers did not sit next to a stranger, Delta did not sell the middle seat on its flights that had them. Its principal rivals, American Airlines and United Airlines, sold all seats. Analysis of the non-stop routes on which Delta faced head-to-head competition with American or United reveals that Delta was able to charge a 10% fare premium and increase its relative market share by 4.7 percentage points from its middle seat policy.

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ER -

The effect of vertical product differentiation on fare and market share: Evidence from Delta Air Lines’ middle seat policy

Abstract

Keywords

ASJC Scopus subject areas

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