Airline ticket price fluctuation and management strategies
The following report lays emphasis on evaluating pricing strategies through monitoring ticket prices for several airlines, routes and flights. The goal is to analyze variables such varying flight periods, different markets and time periods in order to determine how these elements are factored in by airline companies while determining the best ticket prices and booking structures to put in place. Through the evaluation of various markets, competitors, peak times, seasons and fuel and environmental costs we can thus be able to determine how pricing strategies are set in place to facilitate revenue management (Fedorco, Ľ. , & Hospodka, J. Revenue Management Revenue Management (RM) is a crucial aspect in any airline company’s management strategy. The following airlines were also chosen for the study.
Leisure airlines included; Norwegian, EasyJet, British Airways, Jetstar, Silk Air, Air Asia and Scoot Airlines. The following business airlines were selected for the study; Spirit, Southwest, Delta, Alaska, Ryanair, Brussels Airlines and Alitalia airlines. Departure dates and times were considered for the research. As for departure times morning and midday flights were selected throughout for both business and leisure trips. Specific days showed unusual ticket pricing which led to zero flight tickets being sold and/or hiked ticket prices for specific flights. These days included 15th and 20th of October which witnessed massive ticket sellout for all airlines. B738 aircrafts saw a steady increase in ticket cost as the months progressed and the holiday season neared for all airline services. Factors Influencing Choice of Airline data The choice of airlines and type of data to be collected was driven by one critical question asked by customers all the time “where to fly”.
This question is further influenced by macroeconomic factors such as GDP. This shows the existence of a significant difference between traditional carriers and low cost airlines whereby low-cost airlines such as EasyJet utilizes the Dynamic pricing strategy (McAfee, R. P. , & Te Velde, V. The method is made apparent by the gradual price increase as days to departure near. Paradoxically traditional carriers adopt a more rigid formula whereby they set fixed prices and allocate a specific number of seats for booking classes. Business travelers fall into the first category (time sensitive) and mostly prefer to travel on specific days and at specific times, a small group of leisure travelers may also be included into this group especially those who travel under a strict program.
The second broad market category comprises of price-sensitive travelers, this demographic is governed by how much the tickets cost which acts as the main determinant of flight time, duration and destination. From the accrued data both traditional and low cost airlines have factored in these two classes of travelers. This graded mix of passenger’s helps airlines categorize each into specific categories where prices vary dependently. Competition The number of sellers and buyers creates completion especially among sellers as each customizes their services to suit a wider array of buyers. This Revenue management strategy has proven its effectiveness over the years as a result of both social and economic influence. Income Air travel is widely governed by not only the gross GDP of its area of operation but also its consumer’s income.
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