Low-cost pricing strategies in leisure markets

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.