AEM 4160: Strategic Pricing Yezy Lim, Vipin Sharma, Diana Wang, Tianyi Zhang

U.S. Airline Industry

Executive Summary

Industry Overview

Pricing Strategies

Recommendations

Agenda

Executive Summary

Industry Overview

Pricing Strategies

Recommendations

Executive Summary

EXECUTIVE SUMMARY

Key results

Information Asymmetry Dynamic pricing makes it hard for consumers to know how prices are set

Leverage Available Data Research trends and apply pricing concepts

Low Industry Margins Lead to Creative Pricing Unique cost structure, high regulation, and demand shocks lead to lower margins

Why choose the airline industry?

1 Seasonality – Q3 highest unique routes

3 Power Law – price per mile

4 Correlation – prices in substitutable airports

2 Price per mile vs. Miles – 50% decrease (500 to 1500 miles)

5 Mergers – increase price / mile

Executive Summary

Industry Overview

Pricing Strategies

Recommendations

• Crude Oil Prices • Fuel burn efficiency of aircraft (age of aircraft) • Route flown (length of time at cruising altitude) • Hedge with forward contracts

1

2

3

Labor Cost (31.3%)

Fuel Cost (17.3%)

Aircraft Leasing Cost (2.9%)

Top Costs and Drivers

• Heavily unionized industry• High wage premiums and long-term union contracts • Non-union competitors emerged after deregulation• Unions challenged by bankruptcies for wage

concessions

• Majority Fixed Costs - aircraft leases or purchases, fuel, labor cost, leasing space from airports

• Minority Variable Costs• Aim to increase passenger load factor (measure of

utilization in seat capacity)

• Network Carrier - Provide majority of flights from at least one hub, where connecting flights are made

• Regional Carrier - Provide service from small cities • Hub – Airport network carriers uses as a transfer point

to get passengers to their intended destination• Spoke – Airports served by regional or contracted

airlines that support a hub with connecting flights

Hub and Spoke Model Unique Cost Structure

31.30%

23.10%

19.10%

17.30% 4.30%

2.90%2.00%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Revenue and Cost Breakdown (2016)

Wages Other Profit

Purchases Depreciation Marketing

Rent & Utilities

U.S. Domestic Airline Industry Overview

INDUSTRY

Financial PerformanceRevenue has been increasing, and employment has recovered after layoffs during the financial crisis.

INDUSTRY

530,000

540,000

550,000

560,000

570,000

580,000

590,000

600,000

610,000

620,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Empl

oym

ent

Reve

nue

($ in

M)

Revenue and Employment (2007 - 2016)

Revenue Employment

Financial PerformanceAverage net profit has been increasing due to lower crude oil prices and increased demand after the recession.

INDUSTRY

0

20

40

60

80

100

120

-25

-20

-15

-10

-5

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 2014 2015

Cru

de O

il ($

/ ba

rrel

)

Net

Pro

fit ($

bn)

Average Net Profit in U.S. Airline Industry

Net Profit ($ bn) Crude Oil ($ / barrel)

0.057

0.03 0.034

0.068

0.118

0.143

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014 20150

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

EBIT

($ b

n)

EBIT

Mar

gin

Average EBIT in U.S. Airline Industry

EBIT ($ bn) EBIT Margin

Financial PerformanceThe U.S. domestic airline industry has experienced growing operating income, but still remains less profitable than other industries.

INDUSTRY

Industry Organization

Examples Description Distinguishing Factors

Market Share (per airline)

Major Airline

Full service airlines that usually have multiple hubs and destinations to all 50 states. These airlines have

high fares that include baggage, food, and other costs.

HubsLarge market share

Higher pricesAll-inclusive

pricing

14% - 20%

Low Cost Carrier

Low cost carriers focus on providing cheap flights to most

states. These airlines use homogenous aircrafts and no frills ticket pricing structure to eliminate

unnecessary costs.

Low cost ticketsHomogenous fleetsNo hub and spokeNo frills pricing

1% - 5%

RegionalAirline

Regional Airlines only service a specific geographic area within the

United States. These airlines are usually small and sometimes operate for a major airline.

Centered to regionCan operate as part

of larger airlineSmall aircrafts

Less than 2%

There are three main types of airlines, with the four Major Carriers dominating about 67% of the total market share. Major Carriers also offer full service to customers without the extra charges.

INDUSTRY

Industry Rivalry

• Suppliers along value chain: manufacturers (Airbus, Boeing), aircraft lessors, gas/petr. wholesalers, maintenance, GDS, travel agents

• Limited number, high profit margin

Bargaining Power of Suppliers - High

Threat of New Entrants - Low

• Capital intensive (aircraft, hangar, airfield space, labor, etc.)

• Incumbents benefit from network alliances, economies of scale, proven safety record

Bargaining Power of Buyers - High

• Leisure customers (non-business) extremely price sensitive

• Low customer loyalty • Limited product differentiation

and large number of substitutes • Low switching cost

Threat of Substitutes - Medium

• High competition with cars, trains, buses for regional airlines and those that primarily travel short distances

• Low substitutability for long-distance travel

CompetitionU.S. domestic airline industry has moderate competition over price, routes, and frequency in flights.

INDUSTRY

U.S. Airline Industry - As of January 2016

Company Market Share HHI CR4

American 0.199 0.040 0.199

Southwest 0.182 0.033 0.182

Delta 0.170 0.029 0.170

United 0.147 0.022 0.147

JetBlue 0.053 0.003 -

Alaska 0.045 0.002 -

Spirit 0.026 0.001 -

SkyWest 0.024 0.001 -

Frontier 0.019 0.000 -

Other 0.014 0.000 -

1296.81 0.70

**Excluding "Other" in HHI calculation

Industry ConcentrationU.S. domestic airline industry is highly concentrated among four airlines.

INDUSTRY

Main Competitors

American Airlines Group Inc. Delta Air Lines Inc. Southwest Airlines Co.United Continental

Holdings Inc.

Market share: 19.7%

Includes: American Airlines, US Airways, American Eagle

Relevant Hubs: DFW, LGA, JFK, LAX

Based in Fort Worth, Texas, American Airlines is the

largest domestic airline by market share. It has a strong

geographic presence in southern states with hubs in Phoenix, Charlotte, Dallas,

Miami, as well as New York City and Los Angeles.

Market share: 18.4%

Includes: Delta

Relevant Hubs: ATL, LGA, JFK, LAX

Based in Atlanta, Georgia, Delta is one of the worlds

largest airlines. It has a strong geographic focus in the Midwest, with hubs in

Cincinnati, Detroit, Minneapolis, Salt Lake City, as well as New York City and

Los Angeles.

Market Share: 13.7%

Includes: Southwest Airlines, AirTran

Relevant Hubs: DAL

Based in Dallas, Texas, Southwest Airlines is the

largest low-cost carrier in the United States. While it is still considered a low-cost carrier,

it has operations similar to full service carriers. The

carrier only uses one type of aircraft and services 41 states.

Market share: 14.8%

Includes: United Airlines, Continental Airlines

Relevant Hubs: ORD, EWR, SFO, LAX

Based in Chicago, Illinois, United Airlines became one of the worlds largest airlines by revenue after its merger

with Continental. The airline has a strong presence on the east coast as well as the west coast with hubs in New Your City, Washington D.C., San Francisco, and Los Angeles

There are four major players in the market, three full service airlines and one low-cost carrier.

INDUSTRY

Announced: Jan 2001Completed: Apr 2001AA buys TWA

Announced: May 2005Completed: Sep 2005American WH merges with US Airways

Announced: Oct 2008Completed: Jan 2010Delta merges with Northwest

Announced: Sep 2010Completed: May 2011Southwest Airlines merges with AirTran

Announced: Dec 2013Completed: Oct 2015AA merges with US Airways

Announced: May 2010Completed: Oct 2010 (S.O. certificate Nov 2011) UAL merges with Continental

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Major MergersEach major carrier undergoes one major merger each after 2008, with two small transactions occurring before then, consolidating the main players in the industry to four major airlines.

INDUSTRY

Airline IndustryLabor and Personnel

OperationsMaintenance

Sales and MarketingReservations and

TicketingStaff Personnel

Maintenance and Repair

Engine Parts and Manufacturing

Aircraft Transportation Equipment

Airport Operations and Security

Gasoline and Petroleum

Forwarding Industry

Courier Industry

ConsumersTravel Agencies

Economic Drivers:Crude Oil Prices

Customer Disposable IncomeNo. Domestic Trips

No. Incoming Foreign Trips

Corporate Profit

Upstream DownstreamMidstream

Determinants that Affect the IndustrySupply Chain and Drivers of the Industry are main determinants of prices that go into downstream services.

INDUSTRY

Lessor provides: aircraft, complete crew, maintenance, and insurance

~ Charter plane

Lessor provides: aircraft, maintenance and insurance

No crew

Wet Lease Damp Lease

Dry Lease Sale and Lease Back

Lessor provides: only aircraft

No crew, maintenance, or insurance

Operating Lease – Short-term lease (2-7 yr), doesn’t appear on balance sheet

Financing / Capital Lease – Lease to buy; appears on balance sheet

Airlines purchase planes in bulk at a steep discount, sell to lessor at market price, and

lease it back

Used by LCCs as profitable leasing model

Reduce: depreciation expense, risk of resale, and debt involved in airplane

purchases

Upstream - Aircraft Fleet FinancingWhile the majority of aircraft is purchased, leasing has been gaining popularity.

INDUSTRY

Traditional Travel Agents

Online Travel Agents

Direct Distribution -

Airline Website

Indirect Distribution - GDS (global distribution systems)

Airline

Customer

GDS – global distribution system (> 50% all bookings) • Created by airlines to keep track of flight

schedules, availability, prices • Used to be owned by airlines, but have become

independent • Automated reservation process for travel

agents to help sell tickets• Used for airlines to sell tickets using third-

party websites • High cost for airlines (~$12/ticket)

Downstream - Ticket Distribution ChannelMore than 50% of tickets are sold indirectly through reservation systems, which charge airlines high commissions.

INDUSTRY

1958: Federal Aviation Agency (FAA) Created

1978: Airline Deregulation Act

2009: Airline Safety and Pilot

Training Improvement Act

1980s: Bankruptcies and

consolidations; begin hub and spoke

model

Early 1990s: 67% increase in regional

airline accidents

1995: “One level of Safety”

FAA governs regional airlines

under same safety regulations as major

airlines

2005: US Airways, United, Delta, and Northwest all file

for bankruptcy by 2005

2001: Aviation and Transportation

Safety Act creates TSA

Government Regulation and Events Timeline1978 Airline Deregulation Act is the most significant government regulation.

INDUSTRY

Before After

• Fares, flight schedules, and routes regulated by government

• CAB guaranteed airlines a 12% return on flights that were 55% full

• CAB approved few applications for new routes • Airlines competed on service, alone • Flying reserved for higher-class

• Airline safety regulated by government • Low-cost carriers (LCCs) became popular business

model • Airlines no longer limited to fly in certain regions• Air travel tripled in 30 years • Fares decreased via competitive market forces • Consolidation and big four – Delta, United,

American, and Southwest• Almost all major airlines have filed for bankruptcies

or been liquidated

1978 Airline Deregulation Act dissolved the Civil Aeronautics Board (CAB), which regulated U.S. airlines on where they could fly and fares

Government RegulationPrior to deregulation, the U.S. domestic airline industry was less competitive, served fewer passengers, and yielded higher returns.

INDUSTRY

Executive Summary

Industry Overview

Pricing Strategies

Recommendations

Strategy Description Example

VersioningProducing different models of the same product, and then charging different prices for each model

Southwest (Goldilocks Principle)• First class: $574• Business class: $545• Economy class: $369

Dynamic PricingPricing items at a level determined by a particular customer's perceived ability to pay

SeasonalityMileage programsBulk quantity discounts

Flight Distance Depending on the distance of the travel, airlines charge different price/mile

$231 from JFK to BOS $579 from JFK to LAX

Pricing Strategies – 2nd Degree Price DiscriminationSecond degree price discrimination - each customer pays her own price, depending on characteristics of purchase.

PRICING STRATEGIES

Strategy Description Example

Origin Pricing based on the location, demographic, and competition of the origin of the flight

Flying out of a city with a higherannual income might be more expensive than flying out of a town with a lower annual income

DestinationPricing based on the location, demographic, and competition of the destination of the flight

Flying into a city with high tourism rate might be more expensive than flying into a suburb

Pricing Strategies – 3rd Degree Price DiscriminationThird degree price discrimination - charging a different price to different groups of consumers.

PRICING STRATEGIES

Strategy Description Example

Advanced BookingDiscriminating between high-fare and low-fare customers and their target buying times by allowing customers to book in advance

JFK to BOS• $233 1 day in advance• $78 42 days in advance• $88 126 days in advance

OverbookingOverbooking by the average percentage of no-shows per flight to maximize flight utilization and offset high fixed costs

Southwest“In fact, the majority of overbooked flights depart with empty seats because the formula we use to derive our booking levels is carefully applied and quite conservative.”

Predatory PricingPricing below marginal cost to eliminate a competitor and typically occurs when airlines compete for low-fare markets

New York Times, 1999“The Federal Government accused American Airlines Thursday of driving smaller competitors out of one of its most important markets by illegally slashing ticket prices below cost and increasing flights sharply.”

BundlingSelling set of goods or services for a lower price than they would charge if the customer bought all of them separately

Hotel + FlightSeat + beverages, food, services

Pricing Strategies – OtherThe listed strategies are prevalent in the airline industry but not explained further in our presentation.

PRICING STRATEGIES

Factor Description Example

MergersIncreasing or decreasing ticket prices after two airline companies merged into one company

American Airlines and U.S. Airways merged and American Airlines could have changed its ticket prices

Number of Nearby Airports Pricing influenced by the number of airports located close to one another

NYC has three large airports (JFK, EWR, LGA) that travelers can choose among while LA only has one large airport (LAX)

Number of Competing Airlines in a Given Airport

Pricing influenced by the number of airlines flying into and out of a certain airport and whether a given airport is a hub for an airline

Bush International Airport is a fortress hub for United Airlines, responsible for 80% of its traffic

Additional Factors Affecting PricingStrategies are prevalent in the airline industry and explained further in our presentation.

PRICING STRATEGIES

10% Sample of U.S. Domestic Flight Tickets~3M+ Data Points per Quarter Important Data Fields

1. Unique Itinerary ID

2. Number of Passengers

3. Price per mile

4. Miles flown

5. Airline

2

1

0

1

2

3

Total Data points

Round Trips One-way

2.5

Passengers

Column1

Dataset IntroductionBureau of Transportation Statistics Flight Origin and Destination Survey. Much of the analysis focuses on three years: 2010, 2011 and 2015.

PRICING STRATEGIES

43194

46479

47963

45848

40000

42000

44000

46000

48000

50000

Q 1 Q 2 Q 3 Q 4

2010

44828

48202

50075

46002

42000

44000

46000

48000

50000

52000

Q 1 Q 2 Q 3 Q 4

2011

45761

4898550699

47124

42000

44000

46000

48000

50000

52000

Q 1 Q 2 Q 3 Q 4

2015

Number of Unique Routes Over Time

PRICING STRATEGIES

The third quarter sees the most number of unique flights, mostly attributable to summer travelers.Ro

utes

Quarter

0

10000

20000

30000

40000

50000

60000

2008Q3 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2013Q4 2015Q1 2015Q2 2015Q3 2015Q4

Num

ber o

f Pas

seng

ers

Quarter

Top Five Routes Over Time

LGA to FLL

JFK to LGA

LGA to JFK

SFO to JFK

JFK to SFO

LAS to SFO

LAS to LAX

LAX to JFK

JFK to LAX

LAX to SFO

SFO to LAX

Five Most Popular RoutesThe remaining data analysis will focus on routes that are consistently in the top five routes for each quarter: SFO to LAX, LAX to SFO, LAX to JFK, and JFK to LAX.

PRICING STRATEGIES

Three Representative RoutesMuch of our data analysis will focus on three representative routes based on their flight frequencies to gain a better insight on the overall airline industry’s pricing strategies.

PRICING STRATEGIES

1st most popular routeSFO (San Francisco, CA) to LAX (Los Angeles, CA)11,028 flights

1,000th most popular routeMCO (Orlando, FL) to MCI (Kansas City, MO)740 flights

100th most popular routeORD (Chicago, IL) to DIA (Denver, CO)2,983 flights

y = -1.511x + 23.045R² = 0.5252

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

-1 1 3 5 7 9 11 13

Wei

ghte

d A

vera

ge P

rice

per m

ile (i

n ce

nts)

Average Miles (in thousands)

Weighted Average Price per mile

Weighted Average Price per mile (in cents)

[Bubble indicates number of passengers]

Economies of Scale Factor Into Airline PricingPrice per mile decreases, linearly after 1,100 miles, as the miles flown increase. However, most of the customers do not benefit from the sharp decline.

PRICING STRATEGIES

Dynamic Pricing: Price Dispersion By Miles (2015)There is a strong indication of power rule in airline price per miles (50K random samples per airline).

PRICING STRATEGIES

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

Q1 Q2 Q3 Q4 Q5

Ave

rage

pric

e / m

ile

Average Price / Mile (2010)

Q1 Q2 Q3 Q4 Q5

Quarter

Average Price / Mile (2011)

AA UA WN DL

Q1 Q2 Q3 Q4 Q5

Average Price / Mile (2015)

Dynamic Pricing: Seasonality (SFO to LAX)Delta has consistently charged the lowest price per mile, while American and United charge the highest; most airlines have been decreasing price toward Q4, while average prices have increased since 2010.

PRICING STRATEGIES

Price/mile Before and After Mergers

Company Announcement price/mile Completion price/mile

American 2013, Q4 0.236 2015, Q4 0.256

Southwest 2010, Q3 0.182 2011, Q2 0.189

Delta 2008, Q3 0.223 2010, Q1 0.255

United 2010, Q2 0.227 2011, Q4 0.236

Effect of Mergers on PricePrice/mile increased after the completion of all four major mergers.

PRICING STRATEGIES

Major Mergers:American Airlines & U.S. Airways ► American Airlines

Southwest & AirTran ► SouthwestDelta & Northwest ► Delta

United & Continental ► United Airlines

460

480

500

520

540

560

580

600

620

Q 1 Q 2 Q 3 Q 4

Pric

es (d

olla

rs)

Average Ticket Prices in 2010

Q 1 Q 2 Q 3 Q 4

Quarter

Average Ticket Prices in 2011

JFK to LAX LAX to JFK

Q 1 Q 2 Q 3 Q 4

Average Ticket Prices in 2015

Effect of Origin and Destination on PriceDespite the same number of miles flown, flying from Los Angeles to New York is almost always more expensive than flying from New York to Los Angeles.

PRICING STRATEGIES

Correlation Coefficient:

(EWR, JFK): 0.248(JFK, LGA): 0.446(EWR, LGA): 0.595

R² = 0.3545

330

380

430

480

530

580

400 420 440 460 480 500 520 540 560 580 600

LGA

Pric

es (

dolla

rs)

EWR Prices (dollars)

LGA vs. EWR (2010, 2011, 2015)

R² = 0.0616

330

380

430

480

530

580

400 420 440 460 480 500 520 540 560 580 600

JFK

Pric

es (

dolla

rs)

EWR Prices (dollars)

JFK vs. EWR (2010, 2011, 2015)

R² = 0.1992

330

380

430

480

530

580

330 350 370 390

JFK

Pric

es (

dolla

rs)

LGA Prices (dollars)

JFK vs. LGA (2010, 2011, 2015)

Correlation Between Nearby Airports There is positive correlation between ticket prices to Los Angeles (LAX) from all pair combinations of NY airports. Having another nearby airport affected airlines’ average ticket prices.

PRICING STRATEGIES

200225250275300325350375400425450475500

Q 1 Q 2 Q 3 Q 4

Pric

es (d

olla

rs)

Average Flight Tickets to LAX, 2010

Q 1 Q 2 Q 3 Q 4

Quarter

Average Flight Tickets to LAX, 2011

HOU IAH

Q 1 Q 2 Q 3 Q 4

Average Flight Tickets to LAX, 2015

Effect of Hubs on PriceIAH is the main hub for United Airlines and HOU is a low-cost carrier airport located 29 miles away. The average ticket price from a hub airport is higher than the average ticket price from a smaller airport.

PRICING STRATEGIES

0

20000

40000

60000

80000

100000

120000

Q 1 Q 2 Q 3 Q 4

Pric

es (d

olla

rs)

Variance of Flight Tickets to LAX, 2010

Q 1 Q 2 Q 3 Q 4

Quarter

Variance of Flight Tickets to LAX, 2011

HOU IAH

Q 1 Q 2 Q 3 Q 4

Variance of Flight Tickets to LAX, 2015

Effect of Hubs on PriceThere is more variance in hub airports than smaller airports. Firms responsiveness to price dispersion decreases when their market share increases.

PRICING STRATEGIES

Executive Summary

Industry Overview

Pricing Strategies

Recommendations

• Improve major carriers’ competitiveness with LCCs and continue to increase profit margins

• May impact customer satisfaction negatively

1 2

3

Favorable crude oil prices Fare unbundling / “no-frills” pricing

Consolidation among carriers

Why Invest?

• Low oil prices continue to benefit bottom line

• Free up capital for investments in growth

• Alaskan (ALK) / Virgin (VA) merger to increase ALK West Coast penetration and scale

• Two types of mergers: (1) consolidate overlapping routes, (2) add geographic scope

• Likely to continue at a modest pace in fragmented regions of the U.S.

• Passenger demand expected to increase in 2016 from improving U.S. economy

• However, theatened by headline risk from Zika virus, terrorist attacks, etc.

4 Subject to demand shocks

Investment RecommendationInternational Air Transport Association (IATA) expects the industry to double net profit for 2016, due to cheap oil and increased demand for air travel; we recommend investing in fast growth carriers.

RECOMMENDATIONS

Pricing Strategy Recommendations

RECOMMENDATIONS

We concluded on four main Pricing Recommendations listed below.

Test lower prices at hub airports1.6% decrease in passengers from IAH (Bush). Concurrently HOU (Hobby), a cheaper hub 29 miles away, saw an 8.6% increase.

Offer bulk discounts and packagesOffer discounts for several purchases done at once, especially for tourist destinations, especially on third-party websites.

LCCs improve customer loyalty programsPartner with credit card companies to accumulate miles for mileage programs.

Explore subscription servicesExplore profitability of subscription services similar to OneGo, they might become key differentiators.

1

2

3

4

Questions?

SourcesIn Order of Presentation:

Title Image:https://tau0.files.wordpress.com/2012/09/terrell_flyin_0912_02.jpgIndustry and Market Share:http://aviationweek.com/blog/law-changed-airline-industry-beyond-recognition-1978http://seekingalpha.com/article/644991-in-depth-drilldown-of-the-airline-industry-part-1?page=2http://www.statista.com/statistics/250577/domestic-market-share-of-leading-us-airlines/IBIS World – Domestic Airlines in U.S.: http://clients1.ibisworld.com.proxy.library.cornell.edu/reports/us/industry/default.aspx?entid=1125Aircraft Leasing: http://www.globalplanesearch.com/aviation_library/leasing_definition.htmMore on Aircraft Leasing: https://www.quora.com/How-does-the-airplane-leasing-business-work-Why-do-airlines-buy-the-planes-then-sell-them-to-a-leasing-company-and-then-lease-it-backProduct / ticket distribution: http://pwc.blogs.com/industry_perspectives/2015/09/airline-ticket-distribution-how-airlines-might-reduce-global-distribution-system-gds-fees-by-encoura.htmlNet Profit, EBIT, and EBIT Margin Graphs: http://www.iata.org/whatwedo/Documents/economics/Central-forecast-end-year-2015-tables.pdfDeregulation: http://www.onthecommons.org/magazine/airline-deregulation-triumph-ideology-over-evidencehttp://aviationweek.com/blog/law-changed-airline-industry-beyond-recognition-1978Government regulation timeline: http://www.pbs.org/wgbh/pages/frontline/flyingcheap/etc/cronfaa.htmlGDS: http://www.economist.com/node/21560866Air Carrier Summary Data:http://www.transtats.bts.gov/databases.asp?Mode_ID=1&Mode_Desc=Aviation&Subject_ID2=0IAH vs. HOU Prices:http://www.wsj.com/articles/SB10001424053111904009304576528580064496902Airlines at Hobby Airport:http://www.skyscanner.com/flights-to/hou/airlines-that-fly-to-houston-hobby-airport.htmlAirlines at IAH Airport:http://www.skyscanner.com/flights-to/iah/airlines-that-fly-to-houston-george-bush-intercntl.-airport.htmlPriceline Ticket Samples:https://www.priceline.com/home/Southwest Ticket Samples:https://www.southwest.com/