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Pricing strategy of multi-oligopoly airlines based on service quality

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  • Hang Zhou
  • Shikang Zhou

Abstract

In recent years, with the rapid development of China's air transport industry and the change in market consumption structure, service quality has become one of the important factors affecting airline revenue. How to formulate a reasonable pricing strategy and maintain competitiveness in the fierce market competition has become an urgent problem for airlines. First, the impact factor of service quality level in the traditional pricing model is introduced and a static price competition model for multi-oligopoly airlines based on service quality is established in this paper. And then, a dynamic pricing model based on service quality of the multi-oligopoly airlines is established. The model incorporates the weight factor of service quality impact, which is used to indicate the weight of the service quality level in the process of airline dynamic pricing. The research results show that the service quality level of airlines has an indispensable influence on its development. Airlines should improve service quality as soon as possible to enhance market competitiveness and achieve sustainable development.

Suggested Citation

  • Hang Zhou & Shikang Zhou, 2019. "Pricing strategy of multi-oligopoly airlines based on service quality," PLOS ONE, Public Library of Science, vol. 14(6), pages 1-14, June.
    • Handle: RePEc:plo:pone00:0216651
    DOI: 10.1371/journal.pone.0216651
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    References listed on IDEAS

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    2. Moreno-Izquierdo, L. & Ramón-Rodríguez, A. & Perles Ribes, J., 2015. "The impact of the internet on the pricing strategies of the European low cost airlines," European Journal of Operational Research, Elsevier, vol. 246(2), pages 651-660.
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    4. Aguirregabiria, Victor & Ho, Chun-Yu, 2012. "A dynamic oligopoly game of the US airline industry: Estimation and policy experiments," Journal of Econometrics, Elsevier, vol. 168(1), pages 156-173.
    5. Yang, Keng-Chieh & Hsieh, Tsui-Chuan & Li, Hendrik & Yang, Chyan, 2012. "Assessing how service quality, airline image and customer value affect the intentions of passengers regarding low cost carriers," Journal of Air Transport Management, Elsevier, vol. 20(C), pages 52-53.
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    Cited by:

    1. Li Cheng & Liu Conglin, 2023. "Game analysis and pricing strategy of duopoly airlines based on service," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 14(3), pages 1103-1124, June.

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