Combined Effects of Load Factors and Booking Time on Fares: Insights from the Yield Management of a Low-Cost Airline

45 Pages Posted: 28 Mar 2012

See all articles by Marco Alderighi

Marco Alderighi

Università della Valle d'Aosta; Bocconi University

Marcella Nicolini

University of Pavia - Department of Economics and Management

Claudio A. Piga

Keele University - Keele Management School

Date Written: March 28, 2012

Abstract

Based on two strands of theoretical research, this paper provides new evidence on how fares are jointly affected by in-flight seat availability and purchasing date. As capacity-driven theories predict, it emerges that fares monotonically and substantially increase with the flights occupancy rate. Moreover, as suggested in the literature on intertemporal price discrimination, the adoption of advance purchase discounts is widespread as the departure date nears, but it may be part of a U-shaped temporal profile, where discounts are preceded by periods of relatively higher fares. Finally, the intervention of yield management analysts appears to play a substantial role.

Keywords: pricing policy, panel data, Ryanair, yield management

JEL Classification: D22, L11, L93

Suggested Citation

Alderighi, Marco and Nicolini, Marcella and Piga, Claudio A., Combined Effects of Load Factors and Booking Time on Fares: Insights from the Yield Management of a Low-Cost Airline (March 28, 2012). FEEM Working Paper No. 14.2012. Available at SSRN: https://ssrn.com/abstract=2030092 or http://dx.doi.org/10.2139/ssrn.2030092

Marco Alderighi (Contact Author)

Università della Valle d'Aosta ( email )

Strada dei Cappuccini 2/A
Aosta, 11100
Italy

Bocconi University ( email )

Via Sarfatti 25
20136 Milan, MI 20136
Italy

Marcella Nicolini

University of Pavia - Department of Economics and Management ( email )

Strada Nuova, 65
Pavia, 27100
Italy

Claudio A. Piga

Keele University - Keele Management School ( email )

Darwin Building
Staffordshire, ST5 5BG
United Kingdom

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