Do Ryanair’s fares change over time? An empirical analysis on the 2006-2007 flights

The impressive growth of low cost carriers has been mainly exploited through low fares. One may ask whether after having obtained significant market shares, dominant low cost carriers are heading to a new pricing policy. This paper analyzes whether the pricing adopted by Ryanair changes over time. We consider fares relating to all Ryanair’s European flights over a two-year period, from 1st January 2006 to 31th December 2007. We analyze variations on both average and dynamic pricing intensity linking each flight in 2006 with its correspondent in 2007 in order to obtain couples of flights temporally comparable in terms of departure time, day of the week, period of the year and the presence of bank holidays. By employing a panel data approach, we correlate price variations and the variations in the intensity of dynamic pricing to a set of variables related to single routes and their competitive conditions, connected airports and single flights. Our results show that on average both fares and the intensity of dynamic pricing decreased. More than one third of the considered flights saw a price reduction higher than 10%. After becoming the dominant low carrier in Europe, the Ryanair’s strategy appears, on average, to soften its dynamic pricing activities on existing routes.