Targeting leisure and business passengers with unsegmented pricing |
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| Institution: | 1. Università della Valle d’Aosta, Italy;2. CERTeT-Università Bocconi, Italy;3. Università di Pavia, Italy;4. Keele University, UK;5. Rimini Centre Economic Analysis, Italy;1. Master in Economics and Tourism and Dondena Center for Research on Social Dynamics, Bocconi University, via Röntgen, 1, 20136, Milan, Italy;2. Dipartimento di Economia, studi giuridici e aziendali, IULM University, Via Carlo Bo, 1, I – 20143, Milan, Italy;1. Australian Institute of Business (AIB), 27 Currie Street, Adelaide, SA, 5000, Australia;2. School of Management, University of South Australia, GPO Box 2471, Adelaide, SA, 5001, Australia;1. School of Hotel and Tourism Management, Faculty of Business Administration, The Chinese University of Hong Kong, Shatin, NT, Hong Kong Special Administrative Region;2. School of Hotel and Tourism Management, Hong Kong Polytechnic University, 17 Science Museum Road, TST East, Kowloon, Hong Kong Special Administrative Region;3. Revenue Management, Ecole hôtelière de Lausanne HES-SO/University of Applied Sciences Western Switzerland, Route de Cojonnex 18, 1000 Lausanne 25, Switzerland;1. Dept. of Economics, Management and Institutions, University of Naples Federico II, Via Cintia, M.te S.Angelo, I-80126 Naples, Italy;2. Dept. of Economics and Statistics, University of Naples Federico II, Via Cintia, M.te S.Angelo, I-80126 Naples, Italy |
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| Abstract: | We analyse the fare setting strategy of a leading European low-cost carrier, Ryanair, which, until recently, adopted an unsegmented pricing policy (all tickets belong to a single fare class). We show that, to account for different demand characteristics, the company adjusts the two main components governing the dynamics of posted fares, namely time (the number of days before departure) and capacity (the current number of available seats). We find that: 1) in routes with a strong presence of leisure (business) traffic, fares are set to be less (more) responsive to the time component; 2) in schedules more suitable for leisure (business) travellers, fares are set to be less (more) responsive to the capacity component. |
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| Keywords: | Dynamic pricing Unsegmented pricing Market segmentation Ryanair D22 L11 L93 |
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