Pricing strategies of low-cost airlines: The Ryanair case study |
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Authors: | Paolo Malighetti Stefano Paleari Renato Redondi |
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Affiliation: | 1. Department of Economics and Technology Management, University of Bergamo– Universoft, Viale Marconi 5, Dalmine 24044, Italy;2. Department of Mechanical Engineering, University of Brescia – Universoft, Via Branze, 38 – 25123 Brescia, Italy |
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Abstract: | We analyse the pricing policy adopted by Ryanair, the main low-cost carrier in Europe. Based on a year's fare data for all of Ryanair's European flights, using a family of hyperbolic price functions, the optimal pricing curve for each route is estimated. The analysis shows a positive correlation between the average fare for each route and its length, the frequency of flights operating on that route, and the percentage of fully booked flights. As the share of seats offered by the carrier at the departure and destination airports increases, fares tend to decrease. The correlation of dynamic pricing to route length and the frequency of flights is negative. Conversely, as competition increases discounts on advance fares rise. |
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