The Influence of Purchase Date and Flight Duration Over the Dispersion of Airline Ticket Prices

For many years, the air travel market has been the most regulated sector of the economy. Within the last few decades, it has undergone profound change, which is largely a consequence of changes in the law. Another factor that exerted influence on the market was the popularization of new information and communication technologies that affected the interaction between service providers and clients. Due to the application of modern technologies, it is easier for tradesmen to implement pricing policies to maximize profits or minimize losses. In turn, customers acquired a tool for comparing prices, which aids them in selecting the most advantageous offer from their point of view. This study aims to provide an answer to the following questions: how does flight duration affect the price dispersion of airline tickets and does price dispersion increase as the date of departure approaches. To answer these questions, airline ticket prices for flights on the route: Warsaw-London-Warsaw and the route: Warsaw-New York-Warsaw were observed between August 14 and November 14, 2014. Price dispersion increased on both routes as the date of departure approached. Analysis of price variation over time has revealed that longer flights (WAW-ZYP-WAW vs WAW-LHR-WAW) were less dispersed in terms of prices in the period under analysis.


Introduction
The development of civilization in the contemporary world and the increased affluence of societies have led to changes in the operation of today's markets.
New consumption trends are emerging and are related to the development of higher-order needs. Meeting these needs depends on modern technologies, including transport and communication technolo-gies. As far as transport is concerned, the dynamic development of the air travel market has manifested itself through an increasing number of airlines, airports, flight routes as well as through the passengers using them. Air transport is a significant factor that has contributed to the development of many sectors was the liberalization of the air travel market (Button, 2009;Grotte, 2013;Pijet-Migoń, 2012;Valdes, 2015).
Along with the extension of the European Union, this specific revolution in passenger air transport has spread to new Member States in Central and Eastern Europe. Its most visible manifestation was the emergence of low-cost airlines in the Polish market (Pijet-Migoń, 2012). The development of the Internet is also a significant factor that has contributed to changes in the operation of the air travel market. It has revolutionized marketing communication and become the basic source of information for air services as well as a distribution channel for flight tickets.
The development of modern information and communication technologies, including the dynamic expansion of the Internet, has led to a change in business models and influenced interactions between market participants (Szopiński, 2012). Modern technologies have contributed to the gradual transformation in the manner business is conducted by exerting influence over the relationships of firms with suppliers, clients, production processes, other companies as well as over the manner of financing (Castells, 2003). The development of the Internet has also contributed to changes in the operation of the air travel market. It has revolutionized marketing communication and become the basic source of information for air services as well as a distribution channel for flight tickets. Unlike any other tool, the Internet offers abundant possibilities for information management. It is an effective tool that helps the development and operation of the modern economy and contributes to the emergence of new services, including information management services.
For example, some websites allow users to compare prices and select the parameters of goods or services, including both those offered via traditional channels and those sold via the Internet. The development of the Internet has changed the market for firms in many sectors, including the tourist and transport industries.

Modern information and communication technolo-
gies have offered new marketing and management tools for tourism (Buhalis & Law, 2008) and contributed to the emergence of many new types of services on the tourism market (Kabassi, 2010). The propensity to use travel websites to book tickets is the most visible among the youth, students, or educated people with high earnings, who often travel, have no problems with trip reservation, and often use low-cost airlines (Castillo-Manzano & López-Valpuesta, 2010). According to Wang and Law (2007), the application of infor-

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The Influence of Purchase Date and Flight Duration over the Dispersion of Airline Ticket Prices son websites must compare non-price factors, such as product quality and post-purchase services (Gamper, 2012). Using comparison websites may offer even better results, if services undergo comparison. Services may not be stored. With the use of the Internet, companies that offer transport services may more effectively reduce this problem through the use of dynamic prices. Brynjolfsson, Dick, and Smith (2010) claim that contrary to wide-spread belief, the intensity of searching is not correlated with a higher sensitivity to the price. Instead, consumers who look through many offers place a relatively greater value in non-price factors, such as the brand. The carrier's brand has a significant positive influence on purchase intention in the air travel market (Graham & Bansal, 2007;Wang, 2014). As research by Brunger and Perelli (2009) has shown, the primary motivation for using the Internet to search for flight tickets is not the price. The purchase of airline tickets through the Internet was perceived as an experience in itself. What is more, buyers gained control over the price because they could choose when to make the purchase (Brunger & Perelli, 2009). This is perfectly evident in the Polish market. On one hand, the development of air travel services and the increase in consumer interest in these services are noticeable, but on the other hand, the limited transparency of this market, e.g., as far as prices of air services are concerned is a problem. Existing systems that offer price information, including the aforementioned price comparison websites, do not function in an optimal way and carriers can pursue a very elastic pricing policy.
Further, the relevant literature lacks analysis of flight ticket prices and the factors that shape them in the Polish market, which has inspired this study.

The pricing policy of carriers and middlemen regarding trade in airline tickets -review of the relevant literature
Airlines follow various pricing strategies. The closer the date of departure, the higher the price of a given flight (Bilotkach, Gorodnichenko & Talavera, 2010).
The carriers may set different prices depending on the number of days between departure and arrival (Alderighi, Cento & Piga, 2011) and depending on the date of purchase (Mantin & Koo, 2010). This allows airlines to categorize clients according to differ-ent price elasticity. Narangajavana et al. (2014) isolated three methods of setting airline ticket prices: the long term prices (so called strategic prices), prices calculated based on demand, and short term prices based on yield and the conditions of producer.
Price dispersion is encountered in both offline and online selling systems. A factor that exerts substantial influence over price dispersion is the number of reviews posted by clients (Petrescu, 2011). The results that Nelson, Cohen, and Rasmussen obtained from their analysis of cross-sectional data revealed that the level of price dispersion had a positive influence on the price of a product and the number of sellers and that this dispersion was lower for products purchased several times a year (Nelson, Cohen, & Rasmussen, 2007).
If consumers face information overload or conflicting information on the electronic market, price dispersion increases (Grover, Lim & Ayyagari, 2006). According to research by Szopiński and Nowacki (2014) concerning ticket prices on routes from Warsaw (WAW) to the most popular destinations, such as London, Frankfurt, Munich, and Paris, airline ticket price dispersion is observable among various Internet websites offering the option to purchase tickets online for the same routes with the same departure and arrival dates.
One factor that allows such freedom in the setting of prices is the market power of the seller, which allows the seller to distinguish between clients characterized by different ticket price elasticity. Consequently, clients who wish to buy a ticket shortly before departure fall within the category of low price elasticity of demand.
The seller is aware of the lack of substitutes for their offer, which results in a monopolization of the market and a higher price for the customer who wishes to make the purchase late than for the client making it very early (Gaggero & Piga, 2011). Lott and Roberts claim that the reason behind differences among airline ticket prices may be -apart from different price elasticity of demand -the cost of preservation of a certain number of tickets for the purpose of keeping them available (Lott & Roberts, 1991).
Clients who purchase tickets through the Internet pay lower prices for similar journeys than people who buy them through traditional distribution channels. Clients buying on the Internet pay less for tickets even though fees and the range of services offered by airlines on all distribution channels are the same. The Internet Price Effect (IPE) provides an explanation for this fact: it may be because of the different characteristics of clients who buy through the Internet or through traditional travel agencies. For instance, it turned out that clients visiting traditional travel agencies were more often members of the Frequent Flyer Program and more often bought tickets which did not have additional fees in case of changes, e.g., the date of departure (Brunger, 2010). Bachis and Piga (2011) analyzed the price strategies of low-cost airlines. They found that different prices are offered by the same e-seller on the same website and at the same time for exactly the same product.
Airlines that possess a large number of loyal clients are reluctant to use middlemen such as online travel agencies (OTAs), e.g., Expedia or Travelocity. Some carriers, such as Southwest Airlines and Ryanair do not use OTAs because, among other things, they can control prices offered to loyal clients on their own websites (Koo, Mantin & O'Connor, 2011). Various agents selling flight tickets online offer identical tickets at different prices (Lin, Chen & Song, 2009). Sengupta and Wiggins (2012) claim that price dispersion is lower in the online market than offline.
The choice of offers may be affected by the airline's reputation. Consumers are willing to pay more for the better reputation of a corporation (Graham & Bansal, 2007) or manner of ticket price presentation (Palmer & Boissy, 2009). With respect to danger, the customer is not able to evaluate the safety of the services offered by the airlines and is thus eager to pay a higher price for using the services rendered by big carriers rather than smaller, regional ones (Squalli, 2005). A study conducted in Spain shows that the main predictors of airline ticket online purchase intention are, by degree of importance: habits, money saving, performance expectancy, and ease of using the offer (Escobar-Rodríguez & Carvajal-Trujillo, 2013). According to Sam and Tahir (2009), service providers that wish to enhance their clients' purchase intentions should exercise empathy when rendering services and increase the trust that customers place in them. Alderighi et al. (2012) discovered that competition among full-service carriers affected the price levels in the business and the leisure segments asymmetrically. An increase in competition exerted a greater influence on price reduction in the business class than in the tourist class. However, increased competition in the low-cost airline market reduced fees for business tourists and people travelling for pleasure to a similar extent.
Low-cost airlines have become a major player that offers transport services on domestic and international markets (Dobruszkes, 2013;Pijet-Migoń, 2012).
They offer over 30 percent of seats in the European market (Dobruszkes, 2013). The existence of low-cost airlines in the market has led to an increase in the number of people travelling by air (Lian & Denstadli, 2010;Pijet-Migoń, 2012).
Global distribution systems and travel agencies operating on the Internet have become a significant intermediary. Technological development, in turn, has facilitated price comparison for clients. Travel service providers have suffered losses because of that the ease of price comparison. To protect themselves against losses, providers try to vary offers by adding or removing certain components of a service (Granados et al., 2012a;Granados et al., 2012b). Isler and D'Souza (2009) argue that the reason for wide-spread implementation of global distribution systems is to allow airlines to practice price discrimination.
A characteristic feature of services rendered by airlines is the commoditization of offers. Airlines must attempt to vary their offers (Rothkopf & Wald, 2011).
Demand for flight tickets bought for business reasons is less elastic than the demand for tickets bought for tourist reasons (Brons, et al., 2002). People travelling for business are willing to pay a higher price for an airline ticket because they need to be able to change their travel plans (Brons, et al., 2002). Typically, the longer the journey, the smaller the price elasticity for clients buying airline tickets. This is because of the lack of substitute transport on long-distance routes (Brons, et al., 2002).
Studies on the relationships between the price dispersion of flight tickets and competition in air travel offer various conclusions. According to Borenstein and Rose, price dispersion is present on routes which have greater competition or a lower density of connections. On routes serviced by more than one carrier, mean price dispersion among companies is lower than the mean difference between prices paid by different clients for the same route to the same carrier. If the number of airlines increases and the total number of The Influence of Purchase Date and Flight Duration over the Dispersion of Airline Ticket Prices flights on a given route remains unchanged, price dispersion increases. In turn, a greater number of flights on a given route lowers price dispersion (Borenstein & Rose, 1994). Similar conclusions on the correlations between competition and price dispersion were drawn by Stavins (2001). Price dispersion that manifests itself by restrictions on the use of purchased tickets increases if the market becomes more competitive.
By contrast, Geradi and Shapiro show that the greater the competition on a given route, the smaller the price dispersion on the market distinguishing between business and leisure clients (Gerardi, Shapiro, 2009). However, Obermeyer, Evangelinos, and Püschel (2013)  The size of a plane also has a positive influence on dispersion. However, this relationship becomes negative for large planes.

Research methodology
The authors of this paper asked the following research questions: • Does distance influence the price dispersion of airline tickets?
• Does price dispersion increase as the date of departure approaches?
To provide answers to these questions, airline ticket prices were observed on the following routes: War-

Research results
For flights on the WAW-LHR-WAW route, the mean price range was between PLN 762.30 (Air France) and PLN 1114.20 (SAS). The coefficients of variation estimated for each carrier strongly varied and ranged between 0.054 for Brussels Airlines and 0.265 for Alitalia (see Table 1). Two groups of carriers stood out.
The first group was airlines with low price dispersion (coefficient of variation below 0.10). In addition to Brussels Airlines, this group included LOT, Lufthansa, Jat Airways, and Swiss Air. The second group included airlines that offered ticket prices that were changed considerably throughout the three-month period under analysis (coefficient of variation above 0.10): next to Alitalia, these were KLM, Air France, and SAS. The Much more characteristic correlations were revealed during the analysis of differences in prices over time. Table 3  Analysis of variation in prices over time showed that the more distant the flight, the less varied the price was (see Table 3). For the route WAW-ZYP-WAW, the lowest value of the mean price of all the carriers on a given day was PLN 2047.30, and the highest -PLN 2675.67. Table 3 shows that the most attractive prices were offered about two months before departure, and the least attractive price was recorded on the tenth day before the flight. The coefficient of variation ranged between 0.023 and 0.142.  Table 5). For American Airlines and British Airlines time accounted for over 10% of changes in prices. Only one of the ten airlines under analysis (United Airlines) had no statistically significant correlation between the date of ticket purchase and its price.     Research on marketing strategies in the passenger air transport market in Europe is lacking. Studies that examine the American and Asian markets dominate.
Flights on only two routes were analyzed. More in-depth analysis is needed to verify whether tickets offered for longer routes are actually characterized by lower price dispersion. The factor that hinders analysis of airline ticket prices offered on given routes by various carriers is the lack of knowledge about the conditions underlying cooperation between a price comparison website and each carrier. The amount and manner of calculation of the commission may occasionally influence the manner of presentation of the results to the consumers' queries about specific flights.
It would be interesting to carry out research investigating the dispersion of airline ticket prices in different seasons of the year based on a fixed period between the date of registration of a price and the date of departure. Another interesting issue is the price dispersion of airline ticket prices on the following routes: Warsaw Chopin Airport (WAW)-London and Warsaw Modlin Airport (WMA)-London. There is competition between the Warsaw Chopin Airport and the recently opened Warsaw Modlin Airport, which is trying to attract carriers, often at the expense of the Warsaw Chopin Airport.