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Pricing Strategies in Airline Industry

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Introduction

PRICING, SUPPY AND DEMAND Easyjet Essay Hanoi, January 12, 2011 From: Trinh Phuong Thao To: Miss Thuy and Miss Dung Hue, Integrated Business lecturers Subject: Easyjet Essay Table of content Introduction.....................................................................................................2 Role of pricing.................................................................................................3 Easyjet fare fluctuation......................................................................................5 Easyjet and British Airways pricing strategies............................................................7 Conclusion....................................................................................................10 Recommendation.............................................................................................11 Reference......................................................................................................12 INTRODUCTION In the airline industry around the world has appeared low cost carriers as major players who have created huge changes in the original service and pricing strategy. Easyjet is one of the most successful low cost short-haul ones in England as well as European. Along with the development of airline industry and the increase of air traveling demand, low cost flights become more and more common attracting much effort to research pricing strategies in this field in order to reach improvement opportunities. There are some different methods about the way carriers hold their flights. Studying this issue can help managers understand clearly how the prices of low cost airlines in fact could be opposed with normal ones, so they can adjust their oriented goal to achieve good performance. On the other hand, this essay provides a chance to challenge the role of pricing within four Ps of marketing mix and see its actual level of importance in the business environment. Therefore, it will bring marketing theory into reality, which shows the necessity to be flexible applying theory into changing business situation. ...read more.

Middle

The second aspect making up the variation of fare is the time that the flight leaves in a day. Below is an example of time schedule of the flights from Luton to Amsterdam on Tuesday, January 4th, 2010. Ordinal Fare Time Departure (Luton time) Arrival (Amsterdam time) 1 78.99 7:00 9:10 2 58.99 15:00 17:10 3 58.99 18:15 20:25 As can be seen from the chart, the flight at 7 o'clock was more expensive than the others. It took an additional of � 20 in comparison with the flights which left at 15 pm and 18:15 pm. It is because there are higher demands for early morning flight on weekday when customers have business trips. By contrast, on Friday flight fare on late afternoon can require more money than other flights on the same day for the reason that there are many people who go on short holidays on the weekend. Finally, the most importance aspect that influences the price of an Easyjet flight is the different period between the day customers order ticket and the departure day. The chart below reveals the changes in fare of a return flight from Luton to Amsterdam through time. The fares here are calculated by summing up the outbound and inbound flights. The chart shows that though the highest fare could fluctuate but the lowest one only had downward trend. ...read more.

Conclusion

Each method has its own advantages and disadvantages which can suit customers in various situations. RECOMMENDATION There is no perfect pricing strategy which businesses should follow completely. Depending on the market segment and customers each company want to approach as well as strengths and weaknesses of the company, it should investigate to find out the strategy that is the most suitable. As can be showed from this essay that for both high and low cost carriers set their fares base on the length of period before the departure day, so it is suggested that the sooner customers order their ticket, the cheaper fare they can own. Therefore, planning your trip advance brings much financial benefit. Before choosing Easyjet or British Airways for you flight, something should be considered - which luggage is included in your trip and how heavy it is. Bringing baggage that weighs too much may require more money. In short, the fee for additional luggage should be plus on flight fare to know the total amount of money each carrier offers. REFERENCE 1. Frances Brassington and Stephen Pettitt, Essentials of Marketing Second Edition, Chapter 7 'Price' 2. KnowThis.com, Importance of Price, Retrieved from http://www.knowthis.com/principles-of-marketing-tutorials/pricing-decisions/importance-of-price/ 3. Oded Koenigsberg, Eitan Muller and Naufel J. Vilcassim (October 2007), Easyjet Pricing Strategy: Should Low-Fare Airlines Offer Last-Minutes Deals? 4. Keith J Mason, Pricing Strategies of Low Cost Airlines 5. Simon Smith, The Strategies and Effects of Low-Cost Airlines ?? ?? ?? ?? 1 ...read more.

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