Pricing Strategies of low-cost airlines: the Ryanair case
The aim of this study is to analyse the pricing policy adopted by Ryanair, the main low-cost carrier in Europe. The first part of the study reviews the results of literature addressing the subject of dynamic pricing, with specific reference to the air transport industry. The methodological section contains the models of reference for determining the optimal price and the demand function regarding the individual routes. The second part describes and analyses the data base that was used, giving price information relating to all Ryanair’s European flights from 1st July 2005 to 30th June 2006. In the empirical analysis section there is an estimation of the optimal pricing curve for each monitored route, by means of a family of hyperbolic curves as described in the literature. Subsequently, the parameters of the estimated price functions are connected with specific aspects relating to routes, competition, airports and served territories. The analysis shows that a positive correlation exists between the average price of each single route and its length, the frequency of flights operating on that specific route and the percentage of fully booked flights; greater the impact the carrier has on operations at the airports of departure and arrival, more negative is the correlation. With reference to the intensity of the dynamic pricing phenomena, the correlation to route length and frequency of flights is negative. Viceversa, greater the competition, higher are the discounts given on advance bookings, a variable which is not correlated to the level of average prices. Finally, the cost component relating to taxes and fares of the carrier is positively correlated to prices, to the degree of dynamic pricing activity and to the percentage of fully booked flights. To put it briefly, the study confirms the European low fare airline leader’s attention to the latent demand in the air transport industry and to the context in which it operates.
|Date of creation:||2007|
|Contact details of provider:|| Postal: viale Marconi 5, 24044 Dalmine|
Web page: http://www.unibg.it/struttura/en_struttura.asp?cerca=en_dige_intro
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:brh:wpaper:0712. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (University of Bergamo Library)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.