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Neela D. Manage

Florida Atlantic University



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167 – 167 - Data Mining and Econometrics

Latent Class Modeling of Passenger Airfares in the US Airline Industry

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Keywords: Latent class models, Passenger airfares, Hedonic regression, Panel data

Neela D. Manage

Florida Atlantic University

This paper analyzes the determination of domestic passenger airfares for U.S. airlines. The sample contains quarterly panel data from 2011 to 2016 which spans a period of airline mergers as well as entry of new firms and exit of existing firms in the industry. A hedonic regression model of airfares is estimated using a latent class modeling framework in order to examine the effects of route distance, market structure and measures of airline quality.

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