Correspondence: William G. Brunger, Brunger Consulting LLC, 3901 Amherst, Houston, TX 77005, USA. E-mail: BillBrunger@gmail.com

¹is a retired senior vice president of Continental Airlines. He recently completed his Doctorate in Management from the Weatherhead School at Case Western Reserve University. He also holds an MBA (with distinction) from the Wharton School. Over a 28-year airline career, Bill held a variety of Officer-level airline positions in Scheduling, Pricing, Revenue Management, Revenue Decision Support and Distribution Planning. He also sat on the Boards of Directors of Amadeus, Orbitz.com and the Airlines Reporting Corporation (ARC).

Received 7 June 2009; Revised 7 June 2009; Published online 6 November 2009.

Abstract

Customers who use Internet-based online travel agencies to purchase 'Clearly Leisure' trips pay less for similar itineraries in the same markets than those who book through traditional agencies, even when the fares offered by the airline through each channel are identical. This study examines this Internet Price Effect (IPE). The study is operationalized as a multivariate regression using passenger-level data, examining the Fare Paid as a function of distribution channel. The study controls for trip, customer and flight characteristics. The IPE persists at a -3 to 8 per cent level across a wide range of timeframes and market sizes.