Do Ryanair's fares change over time? An empirical analysis on the 2006-2007flights

摘要

The impressive growth of low cost carriers has been mainly exploited through low fares. One mayrnask whether after having obtained significant market shares, dominant low cost carriers are headingrnto a new pricing policy. This paper analyzes whether the pricing adopted by Ryanair changes overrntime. We consider fares relating to all Ryanair's European flights over a two-year period, from 1strnJanuary 2006 to 31th December 2007. We analyze variations on both average and dynamic pricingrnintensity linking each flight in 2006 with its correspondent in 2007 in order to obtain couples ofrnflights temporally comparable in terms of departure time, day of the week, period of the year andrnthe presence of bank holidays. By employing a panel data approach, we correlate price variationsrnand the variations in the intensity of dynamic pricing to a set of variables related to single routesrnand their competitive conditions, connected airports and single flights. Our results show that onrnaverage both fares and the intensity of dynamic pricing decreased. More than one third of thernconsidered flights saw a price reduction higher than 10%. After becoming the dominant low carrierrnin Europe, the Ryanair's strategy appears, on average, to soften its dynamic pricing activities onrnexisting routes.