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The online pricing strategy of low-cost carriers when carbon tax and competition are considered

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  • Cui, Qiang

Abstract

We study the optimal price and optimal profit for low-cost carriers when they adopt two ticket booking channels: official website and online travel agencies (OTA). Compared with existing research, we consider the impacts of carbon tax and the competitions among the airlines. Then we apply the actual example of Ryanair and Qunar.com to analyze the results under different circumstances. The main findings are: 1. Without regard to other costs, Ryanair should select B757 as the single aircraft type to replace A320. 2. For the low-cost carriers, the main channel to sell tickets should be official website. 3. Passenger loyalty has an important impact on the optimal price and the total profit of the airlines.

Suggested Citation

  • Cui, Qiang, 2019. "The online pricing strategy of low-cost carriers when carbon tax and competition are considered," Transportation Research Part A: Policy and Practice, Elsevier, vol. 121(C), pages 420-432.
    • Handle: RePEc:eee:transa:v:121:y:2019:i:c:p:420-432
    DOI: 10.1016/j.tra.2019.02.002
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