Price volatility in the airline markets

In this article we examine volatility measures and investigate what factors explain price volatility in different US domestic air routes. We find that volatility remains reasonably stable up to 2 weeks prior to the flight, at which point it increases significantly. The type, LCC or legacy carrier, and identity of the airlines appears to have a major impact oil the volatility measures, and that these effects are different for 2 weeks out and I day out, even after controlling for market differences. (C) 2009 Elsevier Ltd. All rights reserved.