Virtual interlining within the European airport network: An airfare analysis

Highlights

• Kiwi.com's Tequila platform is queried to collect airfare data.

• Fare differences exist between ‘traditional’ and virtual interlined flight itineraries.

• We nuance the presumed money-saving character of virtual interlined air travel.

Abstract

Virtual interlining, which covers the actively marketed or ‘non-hidden’ segment of all potential self-connecting flight itineraries, is often assumed to be a money-saving travel strategy. In this paper we assess the price difference between virtual interlined and ‘traditional’ flight itineraries within the intra-European airport network. We query Kiwi.com's recently developed Tequila platform, one of the few specialised online travel agencies (OTAs) offering both ‘traditional’ and virtual interlined flight itineraries, to obtain information on all available flights in the first week of August, October and December 2019. Using a series of sign tests, we investigate whether a statistically significant fare difference exists between the cheapest available (direct and/or indirect) ‘traditional’ and virtual interlined flight itineraries. Our results indicate a statistically significant fare difference between the cheapest indirect ‘traditional’ and the virtual interlined flight itineraries in favour of the latter. However, with regard to direct traditional flight itineraries the results are mixed. We explore the size and the scope of these patterns in more detail, and outline possible avenues for further research.

Introduction

In the broadest sense, self-connecting refers to the combination of flights operated by non-partner, independent and/or low-cost carriers (LCCs)¹ beyond the scope of airline alliances and interline or codeshare agreements (Cattaneo et al., 2019; Suau-Sanchez et al., 2017a; Voltes-Dorta and Martín, 2019). Self-connecting travellers thus combine and buy multiple separate flight tickets in order to reach their destination, which consequently involves rechecking their baggage at self-transfer airports. Because self-connected flight itineraries do not constitute an airline-managed trajectory, the airlines cannot be held accountable for missed connections. In spite of these drawbacks, there appears to be a consensus in both academic and commercial literature on the potential money-saving character of self-connecting air travel (see, for example, Ali et al., 2019; Grimme, 2008; PhocusWire, 2018; Suau-Sanchez et al., 2017a, 2016). Furthermore, the connectivity-enhancing potential of self-connecting is widely evidenced (see, for example, Malighetti et al., 2008). However, because travellers may experience difficulties in constructing these flight itineraries themselves (Malighetti et al., 2008; OAG, 2016), commonly referred to as the ‘awareness problem’ inherent to self-connecting air travel (Cattaneo et al., 2017; Grimme, 2008; Maertens et al., 2016), a considerable number of self-connecting flight options remains hidden and unexploited.

In recent years, however, new online platforms providing self-connecting flight tickets have sprung up, allowing travellers to self-connect more easily between multiple airports (Cattaneo et al., 2019; Maertens et al., 2016; Never and Suau-Sanchez, 2020). As such, the prospect of self-connectivity is rising (Never and Suau-Sanchez, 2020). These ‘non-hidden’ or actively marketed self-connecting flight itineraries are often referred to as virtual interlined flight itineraries (see, for example, IATA, 2019; Panayotov, 2018; PhocusWire, 2018). In contrast to self-connecting, virtual interlining thus refers to an organised process (Panayotov, 2018), in which self-connecting flight itineraries are typically combined and sold by specialised online travel agencies (OTAs) via a single transaction (IATA, 2019). In addition, the OTA may provide a guarantee against missed connections, sometimes at an additional cost (IATA, 2019; Panayotov, 2018). Hence, travellers do not have to combine the different flights themselves, and may consequently not even be fully aware of the self-connecting character of the travel itinerary. Although typically provided by specialised OTAs, it still remains unclear whether and to what extent other forms of assisted self-connections (e.g. via airport-led transfer schemes or through specific airline-facilitated platforms such as ‘Worldwide by easyJet’, see for example Never and Suau-Sanchez, 2020) may equally be designated as virtual interlining. In this paper, we specifically focus on virtual interlined flight itineraries that are offered for sale by an OTA (Kiwi.com) via a single transaction. Following Suau-Sanchez et al. (2017b) and Voltes-Dorta and Martín (2019), we denote all flight itineraries that do not involve a connection between non-related carriers as traditional flight itineraries (i.e. flight itineraries involving only alliance-based connections, interline agreement-based connections, connections between codeshare partners or connections provided and protected by a single carrier, supplemented with direct and non-stop flight itineraries).

Virtual interlining is widely considered (see, for example, Panayotov, 2018) and advertised – both by the OTAs offering virtual interlined flight itineraries, as well as by multiple travel blogs and travel websites – as a money-saving travel strategy. In a recent IATA (2019) report, however, the money-saving character of virtual interlining has been called into question. To the best of our knowledge, no research has yet been conducted that systematically evaluates the potential of virtual interlining from a cost-based perspective. Against this backdrop, this study attempts to bridge this gap by investigating whether and to what extent these virtual interlined flight itineraries within the intra-European airport network differ from traditional flight itineraries in terms of airfares. By focusing on virtual interlined air travel we thus aim to capture self-connecting flight schedules that are de facto visible to the consumer during the booking process. As such, we simultaneously address (part of) the ‘awareness problem’ inherent to self-connecting air travel (Cattaneo et al, 2017, 2019; Grimme, 2008; Maertens et al., 2016).

Our contribution to the research field dealing with self-connectivity is twofold. First and foremost, we aim to provide insight in the potential price variation(s) between virtual interlined and traditional flight itineraries within the intra-European air transport network. Second, we contribute to the existing literature on self-connectivity by particularly focusing on virtual interlined flight itineraries, thus addressing a specific category of the self-connectivity spectrum that has as yet received little attention in academic research.

The remainder of this paper is organised as follows. In Section 2, we elaborate on the self-connecting research praxis by providing a literature overview on this topic. Following this, we briefly touch upon airline pricing strategies and its consequences for our research design, which involves a concise reflection on the volatile nature and dispersion of airfares and flight availability. Section 3 describes the data collection process and methodological framework. The results are presented and visualised in Section 4, followed by a discussion and a number of concluding remarks in Sections 5 Discussion, 6 Conclusion, limitations, and future research agenda, respectively.