Low-cost pricing strategies in leisure markets |
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Authors: | Andrea Salanti |
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Institution: | a University of Bergamo, Dept of Economics and Technology Management, Viale G. Marconi 5, 24044 Dalmine, BG, Italy b University of Brescia, Dept of Mechanical Engineering, Viale Branze 38, 25123 Brescia, Italy |
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Abstract: | The practice of dynamic pricing typical of low-cost carriers is generally regarded as a form of price discrimination between “leisure” and “business” travellers on a single flight or route. The same may not be true across different routes because of the different incidence of business travellers. If price increases in the 15 days prior to departure are meant to discriminate business demand, leisure demand should account for earlier price variations. In the present study, we used a database containing the daily fare over the 3 months prior to each flight operated by easyJet during 2009. For each route, we defined the “leisure index” as the difference between the price rates of change during the 90 days and 15 days prior to departure. Overall, “business” routes had lower average prices per km, while “leisure” routes showed less dynamic price behaviour, with higher minimum and lower maximum prices per km. |
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Keywords: | Low-cost carriers Dynamic pricing Leisure routes Price discrimination |
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