Pricing Strategies by European Traditional and Low Cost Airlines: Or, When is it the Best Time to Book on Line?

27 Pages Posted: 17 Jul 2006

See all articles by Claudio A. Piga

Claudio A. Piga

Keele University - Keele Management School

Enrico Bachis

Nottingham University Business School (NUBS)

Date Written: July 2006

Abstract

It is often assumed that the airlines' fares increase monotonically over time, peaking a few days before the departure. Using fares for about 650 thousand flights operated by both Low-Cost and Full Service Carriers, we show several instances in which the monotonic property does not hold. We also show that the volatility of fares increase in the last four weeks before departure, which is the period when the airlines can formulate a better prediction for a flight's load factor. Finally, especially within the last two weeks, Full Service Carriers may offer lower fares than those posted by Low Cost Carriers.

Keywords: on-line pricing, price discrimination, dispersion, yield management

JEL Classification: L11, L13, L93

Suggested Citation

Piga, Claudio A. and Bachis, Enrico, Pricing Strategies by European Traditional and Low Cost Airlines: Or, When is it the Best Time to Book on Line? (July 2006). Available at SSRN: https://ssrn.com/abstract=916505 or http://dx.doi.org/10.2139/ssrn.916505

Claudio A. Piga

Keele University - Keele Management School ( email )

Darwin Building
Staffordshire, ST5 5BG
United Kingdom

Enrico Bachis (Contact Author)

Nottingham University Business School (NUBS) ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

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