استراتژی های قیمت گذاری کم هزینه در بازارهای تفریحی
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|1890||2012||8 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Tourism Management, Volume 33, Issue 2, April 2012, Pages 249–256
The practice of dynamic pricing typical of low-cost carriers is generally regarded as a form of price discrimination between “leisure” and “business” travellers on a single flight or route. The same may not be true across different routes because of the different incidence of business travellers. If price increases in the 15 days prior to departure are meant to discriminate business demand, leisure demand should account for earlier price variations. In the present study, we used a database containing the daily fare over the 3 months prior to each flight operated by easyJet during 2009. For each route, we defined the “leisure index” as the difference between the price rates of change during the 90 days and 15 days prior to departure. Overall, “business” routes had lower average prices per km, while “leisure” routes showed less dynamic price behaviour, with higher minimum and lower maximum prices per km.
Price differentiation strategies as traditionally pursued by flag carriers were one of the primary examples used by introductory/intermediate microeconomics textbooks to describe price discrimination under monopolistic conditions. The business market and the tourism/leisure/personal travel market were assumed to have different demand elasticities and to be kept separated by carriers. Deregulation via increased competition was postulated to mitigate the practice of discriminatory pricing. However, recent factual evidence has shown that things have by no means gone that way. As frequently happens in disciplines like economics, different answers to the same question have been given at different times. Indeed, since the early 1980s, authors like Frank (1983) have warned against the habit of equating differential pricing with the discriminatory pricing allowed by market concentration. Subsequent literature has shown that demand uncertainty (Dana, 1999) and the competitive environment (Gerardi & Shapiro, 2009) are sufficient reasons to induce airlines to offer advance discounts and, more generally, that these variables affect price dispersion both among and within the airline fare structure. Regarding low-cost carriers (LCCs) in particular, several studies have also convincingly shown that their offered fares systematically tend to increase as the departure day approaches (Button and Vega, 2007, Malighetti et al., 2009 and Piga and Bachis, 2007) implying that travellers have an increased willingness to pay as the departure day approaches. However, willingness to pay may increase with booking, regardless of the customer type, simply because of a shift in perceptions and expectations about fares and flight availability in the remaining days (Chen & Schwartz, 2008). Among specialists in air transport economics, the idea that differential pricing ultimately discriminates between business and leisure travellers has persisted. Practically oriented discussions of discriminatory pricing, usually under the more palatable heading of “revenue (or/and yield) management”, distinguish between quantity- and price-based approaches to revenue management (see, for example, Holloway, 2008). The former usually produces the well-known array of fare bases and booking classes utilized by traditional carriers, while the latter generates the dynamic pricing so typical of LCCs, namely, that of raising fares as the booking date approaches the date of flight. For a comprehensive discussion of the rationale behind the practice of dynamic pricing, see McAfee and te Velde (2006). Although low-cost carriers do not typically provide business class, it does not follow that they do not target business travellers. A survey by Mason (2000) drew attention to the high propensity to employ low-cost carriers for short-haul flights among business travellers. In the case of EasyJet, as early as in 1999 its founder Haji Ioannou indicated that on some routes the proportion of business traffic reached figures around 50%. Its chief executive Andy Harrison recently stated (easyJet Interim report, January 22, 2009) that “the airline was attracting business passengers who are trading down in the current crisis” and “we are seeing a flight to value”. EasyJet currently operates a large number of typically business routes with convenient and frequent schedules. If we assume that leisure travellers – differently from business ones – are inclined to book well in advance, we may conclude, as stated by Button and Ison (2008), that: The airline can maximize its revenues by fare differentiation, and in particular, charging higher fares to those who book closer to take-off time – these are often business travellers that are fairly fare insensitive because they have to make the flight at short notice (p. 3). Focusing on a single flight, the above conclusion seems almost undisputable, and paves the way to some considerations about the welfare effects of dynamic pricing, based on the implicit cross-subsidizing mechanism. In fact, from a welfare perspective, [I]t is interesting to observe that not all travellers are affected in the same way with a decrease in the level of competition. Business travellers, who purchase high-price tickets, end up paying relatively lower fares in less competitive markets while leisure travellers pay more. Conversely, leisure travellers end up paying relatively lower fares with more competition. (Hernandez & Wiggins, 2008, p. 20) Otherwise, if we consider a single route, it seems equally appropriate to observe that Even if differences in air fares are explicitly discriminatory […] they can improve profits and welfare. Low prices directed at leisure travellers, with elastic demand, can lead to an increase in the overall size of the market; this results in higher frequency, which is valued by the business travellers paying highest fares, and may also lead to larger aircrafts with lower unit costs. (Forsyth, Button, & Nijkamp, 2002, p. xiv). The same conclusions, however, cannot be extended to the whole set of routes operated by a single carrier, if only because we cannot assume the same shares of business/leisure passengers on every route. Indeed, due to the diverse nature of different destinations, we may expect a widely divergent composition of business/leisure traffic on different routes. In this case we do not have sufficient a priori reasons to predict generally lower fares for “leisure” than for “business” destinations. The aim of this paper is to investigate this last issue, which so far has been somewhat neglected even in specialized literature, with reference to one of the two major European LCCs. Using a database comprised of 3 months of daily fares prior to each flight operated by easyJet during 2009 (902 routes, 321,538 flights), we traced the fare variation for each individual route as the flight date approached. Our hypothesis was that price increases in the last 15 days before departure are meant to discriminate business demand, whereas leisure demand should account for earlier price variations, and that the relative weight of the two effects cannot be established a priori. Accordingly, we classified each route by a “leisure index”, defined as the percentage of offered flights where major price increases are in the earlier period. If this presumption is correct, it should be expected that: (i) the leisure index distinguishes between typically “leisure” and more “business” oriented routes, and (ii), on average, the leisure index intensifies for weekend and midday flights, whereas longer-term seasonal effects depend on the specific route characteristics. These assumptions should permit us to estimate the different pricing dynamics for the two kinds of flights/routes. The paper is organised as follows. Section 1 reports the details of the construction of the leisure index. Section 2 describes the database and methodology employed in this study, and presents the main econometric results. Section 3 offers some concluding remarks.
نتیجه گیری انگلیسی
As far as differences of revenue management between leisure and business routes are concerned, the above empirical results indicate that: i) leisure routes have higher average prices per km, and (ii) prices on leisure routes show a less dynamic behaviour than on business routes, with higher minimum and lower maximum prices per km. These findings are easily understood from the carrier’s perspective. Dynamic pricing seeks to approximate the high-fare (business) demand for each flight, keeping back an appropriate number of seats for the last days before departure. Because other seats are sold at lower prices in earlier periods, if a flight has a higher level of expected business demand, the carrier can afford to sell the other seats at lower fares. This explains why maximum prices for business flights reach a higher level and dynamic pricing activities appear to be more pronounced than for leisure flights. In the latter case, since the expected business demand is low or not existent, price dispersion for leisure passengers must be lower to allow carriers to reach the target revenue. We also find robust evidence of higher average fares on leisure routes, suggesting a much less obvious form of price discrimination between leisure and business routes. Our sensitivity analysis shows under what conditions the carrier’s revenues on leisure routes are higher than on business routes, and appears to confirm the robustness of our conclusions. However, it does not follow that the carrier could increase its profitability by offering only leisure routes. The two kinds of routes are often offered on a complementary basis in order to increase the aircraft turnover and utilization. The same aircraft could be employed in business routes earlier in the morning or later in the evening and in leisure routes during the central hours of the day. For the same reason, on a year basis, a specific aircraft could operate leisure routes during summer and business routes during winter. From a carrier perspective, the most relevant variable for pricing on leisure routes is the setting of the initial fare, three months before departure. If it is set to a too low level, the risk is that too many seats are sold at highly discounted prices and, as a consequence, flight revenue does not reach the break-even level. For business routes the most critical variable is the setting of the rate of increase in prices during the last days before departure. The carrier ability to discriminate business demand depends on it. In this case, the initial price could be set to lower levels since most of the revenue comes from the last days before departure. So, it is more probable to find highly discounted fares for advance bookings on business routes than on leisure routes. As a final point let us observe how these findings are intriguing from the perspective of leisure travellers. The best deals can be found on business routes, especially for advanced bookings. On average, it is cheaper to fly to large capital cities (typical destinations of business travellers) than to exotic islands in Greece or Egypt, and cheaper to fly during the week, earlier in the morning, or later in the evening. In other words, it pays to stick as close as possible to business travellers since they are taking a bigger share of the burden. In this respect, temporal price discrimination is not so different from traditional quantity discrimination.