The COVID-19 outbreak has brought an unprecedented crisis in both the tourism travel and aviation sectors. Understanding how firms compete guaranteeing mobility in an uncertain situation like the current one is a fundamental question in the field of socioeconomic planning and development. Using two-stage least squares (2SLS) regression analysis, this research studies the relationship between the incidence of COVID-19 in tourism destinations and the airline pricing policy. To this end, big data and business analytics techniques were used to obtain 2,668 price observations from 13 European airports to the five main Spanish sun and beach destinations. The results suggest a high inverse relationship between the incidence of the virus in the destination region and the mobility and price of the airline ticket. Other factors like economic activity, fleet capacity, and the distance between origin and destination have also been decisive in airlines' price-setting strategies during the current pandemic.
TopIntroduction
Tourism and air transport are heavily related (Papatheodorou, 2002; Duval, 2013; Fernández et al., 2018). This relationship seems to have a bidirectional nature (Khan et al., 2017), which means that changes in the conditions that affect tourism have a significant impact on air transport, and vice versa. This interdependence has increased in recent years supported by the globalisation of tourism (Hjalager, 2007) and the liberalisation of air transport (Forsyth, 2008; Seetaram, 2010; Papatheodorou, 2016).
International tourism has experienced a golden age in recent decades, which has led researchers to consider it one of the primary sources of economic growth (Archer, 1995; Holzner, 2011; Sequeira & Nunes, 2008). The principal economic benefits include foreign exchange earnings, employment, and income (Tang & Jang, 2009; Lee & Chang, 2008). The tourism golden age has been based on two factors: Price and Safety.
The health crisis caused by the outbreak of COVID-19 is putting the tourism and aviation sectors in check. According to the International Air Transport Association, 2020 will be the worst year in history for airlines (IATA, 2020). The impact of the Covid-19 crisis does not seem to be less on tourism, with more than 100 million direct tourism jobs at risk (UNWTO, 2020).
The study of the impact of the coronavirus crisis on tourism, mobility and air transport is of great interest at present. The social-economic consequences of the lockdown measures taken in almost all countries to contain the pandemic crisis are several and their long-term development is not yet foreseeable (Ehlert, 2021). This paper aims to contribute to this literature by investigating how airlines operating in tourist destinations -guaranteeing mobility- are responding to the current crisis. To this end, we pursue the answers to the following questions: What are the main variables that determine the price of airline tickets today? How do airlines compete in a market shock situation like the current one? What has been the pricing strategy followed by airlines operating in tourist destinations during the pandemic? To what extent has the evolution of the pandemic influenced the prices of flights to tourist destinations?
This paper is innovative since it presents the following novelties: (1) It evaluates the effect of Covid-19 on the pricing strategies of airlines with a tourist orientation; (2) It used Big Data-based techniques in the data collection process.
The structure of this paper is as follows. Section 2 reviews the literature on tourism, transport and security and contextualises the current Covid-19 crisis. Chapter 3 details the data sources and sample. Section 4 provides the empirical analysis, and in section 5 the results found are presented. Finally, the main conclusions are presented in section 6.