Besides, reducers are aiming simultaneously to achieve targeted sales volume, sales revenue and market share while optimizing their return on investment. However, changing a price or setting new price is very difficult work because price have to adjusted according to produce demographic factors, life style, motivation, attitudes’ customer. To achieve max profit and have good pricing strategies are the most important objective that managers decried.
In summary, pricing can bring to organizations both opportunity and threat, which of them is base on the judiciousness of decisions consumer. Therefore, this process should be done step by step carefully.
3.EasyJet fare fluctuation
The imagine show the price of a one week return ticket from Luton to Amsterdam.
From the chart the flight at 7:30 to 9:45 o’clock was more expensive than the others. It took an additional of £ 22 in comparison with the flights which left at 16:40 to 20:40. It is because there are higher customer flight mainly in the morning. Besides, the flight fare on late afternoon on weekends can require more money than other flights on the same day for the reason that major people who want to come back soon after holidays. Secondly, the difference of departure spot might result in the difference of the amount of money customer have to pay. For example from chart, flights on December 26 at 7:30 from Luton to Amsterdam, far was £ 89 but if customer went from Amsterdam to Luton, fare was £ 56. Other flights have the same condition showing that fares are affected by local authorities’ policy and different carrier’s charge.
The data collection process highlighted two ticketing philosophies. Since the outset of its operations easyJet has always had a one-way ticketing policy. The airline has only one price in the market for any one flight at any one time. The lowest fare is offered into the market first and then prices rise as the departure draws closer and the seats are sold. The general policy would seem to be to sell a number of seats (perhaps 10) at the lowest fare and then increase the price by £10. A similar number of seats are then made available at the next price point, this sales policy is then continued, with fares rising perhaps some £150 (one way) above the lead in fare. If sales on a particular flight are deemed to being taken up too quickly then the price rises are increased above the normal £10 level or fewer seats are offered at each price bracket, or a combination of both these strategies. If sales are slower than planned, more seats are released at the lower fares to increase sales, and prices rises are below the normal level.
This ticketing philosophy it transparent to consumers. There is a “value for money” offering, which is easily understood by consumers. By offering only one price in the market, the consumer is confident that “shopping around” using other channels or making greater ticketing restrictions will not reap the reward of lower fares. As the airline educates their consumers that the cheapest fares are sold first, consumers checking prices are more likely to purchase straightaway as they will have confidence that lower prices are not likely to appear later.
Table 2: Average low cost airline fares, from six week prior to departure
While this mid week trip is the cheapest, it can be seen that, on average, prices do not rise throughout the booking process with the cheapest average fare found three weeks prior to departure, with fares rising afterwards. A similar marginal fall in average fares was also found in the Monday day return scenario, again finding that the cheapest time to book tickets was three weeks prior to departure. It is only the Friday weekend trip scenario in which fares rise throughout the booking process, with the average fare a day prior to departure some 59% higher than the average fares offered six week before the flight.
The greatest rise in fares was found in the mid week trip, with fares rising 78% during the booking process, and the Monday day return having the smallest rise, at just 32%. It can be seen that in the last week fares rise dramatically. The policy here is that travellers booking very close to departure are likely to be less price sensitive and therefore prepared to pay higher fares. Therefore, customers seeking low fares at the last minute for trips whether they be mid-week, at the weekend or for an Monday morning business trip are likely to be disappointed with two scenarios charging over £90 per sector and the mid week trip charging over £70 each way the day prior to departure.
4.EasyJet and British Airways pricing strategies
British Airway is an traditional in England. In order to compare its pricing strategy with the one of low cost airline EasyJet, Let’s take a look at the graph below that shows two carrier’s cheapest return tickets on the same day. There is a small difference that the route of British Airway flights is from London City Airport for the reason that carrier do not have flights in Luton.
British Airways fares were much higher that the ones of EasyJet. Booking one day advance, EasyJet fare was equal two-third of British Airways fare. While EasyJet lowered its fare much when the time booking advance lengthened, British Airways also did that but with less decrease. If customers order their ticket three months before their trips, EasyJet offered them the fare that was less than 50% of British Airways. The difference was base on the pricing strategy that each carrier used. EasyJet had only one class that was offered with the same fare but the fare was depended on the day customers buy tickets. By contrast, British Airways did not change their fare over time. It provided a wide range of classes which had different services and the ticket price was decided on which class customer chose. However. The fare of British Airways on the graph was also higher at the time near departure day. Because the lowest fare which was limited was sold more quickly, the day before the flights did not tend to have any cheap ticket left. Hence, though using two opposed strategies, one rule was the same – customer were more likely to be able to buy a lower fare by booking early.
EasyJet and British Airways have considerably different marketing strategies . The most obvious is their pricing policies. British Airways has the more common pricing policy with a range of price from economic to premium classes. On the other hand , EasyJet, is performing a pricing strategy that many considered as the future of the airline industry. In one of their reviews, the company stated that they intend to make flying as affordable as a good pair of jeans. They intend to achieve that by eliminating unnecessary costs and frills which characterize traditional airlines, like using the internet to reduce distribution costs , maximize utilization of aircraft, ticket less travel, no free lunch, efficient use of airports, etc.
Easyjet uses internet as its main distribution channel. The company has received awards for the best internet services facility in the industry More than 90 of the bookings in Easyjet are made via the internet other channels are through business and leisure travel agents. British Airways on the other hand, uses its wide range of network as their ultimate distribution channel. The company takes pride in its worldwide affiliates. Corporate slogan is “The world 's favorite airline” The company provides internet services also, but most flight is booked through telephones rather than internet
Financially, EasyJet has the upper hand compare to the British Airways Despite the smaller scale of structure compare to British Airways. Easyjet has a lower gearing ratio and a lower debt-to asset ratio compare to the British Airways. This is due to increasing market share that goes to the low cost carriers business within the last decade
5. Conclusion
British Airways has a larger area coverage and larger number of segments . The company has a wider range of services and one of the largest fleets in the industry. Easyjet on the other hand, has a smaller area of coverage and smaller fleet. The company also has fewer segments and narrower range of services
The British Airways gain its strength in the market because it flies across the Atlantic more times than its competitors. The company also has a high-tech ticketing and checking mechanism in most airports of the United Kingdom that provides customers with convenient processes
Easyjet, on the other hand, gain its strength from its pricing policy the company provides one of the cheapest airplane tickets in the industry. Moreover the company has the highest reputation for ensuring easy-via-internet ticketing activity and maintaining on-time flights the company won several awards or the best technological innovation in the airline industry.
6.Reference
- 1.Barnett , A . 2003 . Airline security 's false hope . An MIT Enterprise Technology.
- 2.Bureau of Transportation Statistics . 2003 . Air traffic statistics and airline financial.
- 3.Devlin , K . 2002 . The crazy math of airline ticket pricing Eugene Commercial Aviation.
- .4. Simon Smith, The Strategies and Effects Of Low-Cost Airline.
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tungxuong (student)
