This study analyzes how changes in flight frequencies contemporarily affect the pricing strategy of airlines. Focusing on the low-cost carrier (LCC) framework, we compare easyJet's 2012 average fares on all routes with their 2011 counterpart in the same "equivalent" week. Empirical analyses show that changes in frequency are negatively correlated with fare variations, both in monopolistic and competitive contexts. Our conjecture is that if the load factor has to be maintained within a sustainable range and the demand level can be assumed roughly constant, at least in the short period, variations in average fares should be negatively correlated with changes in frequency at the route level. Moreover, by analyzing easyJet's price discrimination dynamics, we find that an increase in weekly flights leads the airline to strategically price discriminate demand among offered flights (between-flights discrimination). , especially in competitive situations, while reducing its ability to intertemporally price discriminate on the same flight (within-flight discrimination).

(2018). Changes in frequencies and price variations on point-to-point routes: The case of easyJet [journal article - articolo]. In TRANSPORTATION RESEARCH. PART A, POLICY AND PRACTICE. Retrieved from http://hdl.handle.net/10446/119180

Changes in frequencies and price variations on point-to-point routes: The case of easyJet

Cattaneo, Mattia;Malighetti, Paolo;Redondi, Renato;Salanti, Andrea
2018

Abstract

This study analyzes how changes in flight frequencies contemporarily affect the pricing strategy of airlines. Focusing on the low-cost carrier (LCC) framework, we compare easyJet's 2012 average fares on all routes with their 2011 counterpart in the same "equivalent" week. Empirical analyses show that changes in frequency are negatively correlated with fare variations, both in monopolistic and competitive contexts. Our conjecture is that if the load factor has to be maintained within a sustainable range and the demand level can be assumed roughly constant, at least in the short period, variations in average fares should be negatively correlated with changes in frequency at the route level. Moreover, by analyzing easyJet's price discrimination dynamics, we find that an increase in weekly flights leads the airline to strategically price discriminate demand among offered flights (between-flights discrimination). , especially in competitive situations, while reducing its ability to intertemporally price discriminate on the same flight (within-flight discrimination).
articolo
Cattaneo, Mattia; Malighetti, Paolo; Redondi, Renato; Salanti, Andrea
(2018). Changes in frequencies and price variations on point-to-point routes: The case of easyJet [journal article - articolo]. In TRANSPORTATION RESEARCH. PART A, POLICY AND PRACTICE. Retrieved from http://hdl.handle.net/10446/119180
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