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Wednesday, April 06, 2011
When non Subject Matter Experts attack!
Non-sports post.
Fantastic job by Nate, in tackling the issue of which airports are more fairly priced than others, but tackling it the way we as baseball quants would tackle it. Nate lays out his methodology in good detail, and he also links to his data sources, the subject matter experts, and the guys you would expect to do what Nate is doing. Presumably they aren’t doing it, because Nate spent all his time doing it.
My airport of choice is Newark Liberty, and that’s for the sheer convenience. Basically, almost all NJ highways lead to Newark Liberty Airport, and if they don’t then those lead to other NJ highways that lead to Newark Airport. The entire state of NJ is laid out to basically treat Newark LibertyAirport as the hub. Nate shows me something unsurprising:
At Newark Airport, for example, I estimate that the average fare should have been $382, given the itineraries that the passengers in the bureau sample traveled. However, the average round-trip fare that those passengers actually paid was $454 — a 19 percent markup above fair prices.
At LaGuardia Airport, by contrast, prices were more in line with market rates (the average ticket price was $338, as compared to a fair rate of $331). And prices were actually somewhat cheap at J.F.K. (average price $389; fair price $413). Passengers at Newark paid an average of 12 percent more than those at J.F.K. for their trips to Los Angeles, 49 percent more for those to Chicago, 65 percent more to Dallas, and 118 percent more to Washington, D.C.
Basically, the convenience of Newark Liberty is worth the 72$ markup, relative to the other airports of choice (LaGuardia and JFK). That’s because NYC traffic is horrible. In order to get to those airports from NJ, you would have to plan to leave two hours earlier than you would leaving for Newark (unless you happen to live along the Hudson River). Certainly at least an hour earlier, regardless where in NJ you live. (You could of course try to avoid the NYC traffic by taking trains, or leaving in offpeak hours, like early in the weekend morning, or very late on a weeknight.) Not to mention the toll to get into NYC, plus the cost of the car. You add it all up, and 72$ seems pretty reasonable to me.
Anyway, just fantastic stuff.
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