The effect of the COVID-19 pandemic on the behaviour of airline ticket prices for flights departing Madrid

The covid-19 pandemic has affected the airline industry, among others, by limiting peoples ability to travel due to the mobility restrictions in place. The economies will be left battered by this pandemic, and that the price of airline tickets must play a key role in the recovery of the sector. This paper analyses the effect of the pandemic on the price behaviour of airline tickets in terms of both level and volatility, using information on flights departing from madrid to different destination cities around the world. The results show an unprecedented drop in prices for flights to most destinations, except those to the asian continent—probably because there had been a return to some degree of normality there by the time of data collection—and an increase in dispersion, except for domestic flights. All of these results are found to be more pronounced for the top tourist destinations.