The impact of the internet on airline fares: Customer perspectives on the transition to internet distribution

Customers who use internet websites find and buy lower fares than those who use travel agents for similar trips despite identical fares and availability offered through both channels by most large US airlines. In an effort to understand, describe and corroborate economic and marketing theory explanations for these results, we studied the behavioural changes implied by the internet, asking customers how they have understood the transition to internet travel purchase and how it has changed their behaviour, specifically about the impact of their search process on fare levels. Interviewees identified increased ‘breadth of search’ and ‘control’ as the primary benefits of internet purchase channels revealing beliefs that lower fares are a by-product of broader and more thorough search. While new social and search involvement dynamics enabled by the internet seem to have increased the diligence of some subject's searches, many respondents described very simple one-or-two-step search strategies, and all used simpler search protocols than they knew were available.