Low-cost pricing strategies in leasure markets

Paolo Malighetti (), Renato Redondi () and Andrea Salanti

No 1007, Working Papers from Department of Management, Information and Production Engineering, University of Bergamo

Abstract: The practice of dynamic pricing, so typical of low cost carriers, is generally regarded as a form of price discrimination between "leisure" and "business" travellers on the single flight or on the single route. Across different routes, however, things may go differently. If price increases in the last 15 days prior to departure are meant to discriminate business demand, leisure demand should account for earlier price variations. Working on a database including the daily fare over the 3 months prior to each flights operated by easyJet during 2009, we assign to each route its own "leisure index", defined as the difference between the rate of price change during the ninety days prior to departure and the one during the last 15 days. Empirical results can be summarized by saying that "business" routes have lower average prices per kilometre, while "leisure" routes show a less dynamic price behaviour, with higher minimum prices and lower maximum prices per kilometre.

Keywords: Price differentiation; price discrimination; market segmentation; dynamic pricing; low cost carriers (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Low-cost pricing strategies in leisure markets (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:brh:wpaper:1007

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