Abstract
Dynamic pricing and revenue management in airline industry have been the subject of research for more than twenty years now. Building upon that massive body of research, in this paper we investigate actual dynamic pricing patterns in new and emerging markets. We specifically focus on the impact that recent entry of low cost carriers on a number of routes from Belgrade Nikola Tesla Airport might have had on pricing practices of legacy incumbents. Unlike with most of previous contributions in the field, we analyse the market characterised by relatively low frequencies and predominantly short-to-medium haul flights. In this paper, we observe and analyse pricing dynamics on two types of routes: routes where only legacy carriers operate and routes where legacy carriers face competition from low cost carriers. The effects of route competition on offered airline fares are estimated and conclusions derived.
Highlights
Dynamic pricing, being the core part of the concept of revenue management, is one of the main instruments at airlines’ disposal to increase profit
As an illustrative case study, we focus on the impact that recent entry of low cost carriers (LCC) on a number of routes from Belgrade Nikola Tesla Airport might have had on pricing practices of full-service carriers (FSC) incumbents
Ticket prices are grouped based on carrier type (FSC or LCC), type of route and the day of flight for competing routes
Summary
Dynamic pricing, being the core part of the concept of revenue management, is one of the main instruments at airlines’ disposal to increase profit. We focus on temporal evolution of prices, i.e. how the ticket price, as seen by a passenger, changes during several weeks before the flight in seemingly different competitive settings.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
