Pricing Strategies of the European Low-Cost Carriers Explained Using Porter's Five Forces Model

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Title: Pricing Strategies of the European Low-Cost Carriers Explained Using Porter's Five Forces Model
Authors: Moreno-Izquierdo, Luis | Ramón-Rodríguez, Ana B. | Perles Ribes, José Francisco
Research Group/s: Economía del Turismo, Recursos Naturales y Nuevas Tecnologías (INNATUR) | Internacionalización de la Empresa y Comercio Exterior
Center, Department or Service: Universidad de Alicante. Departamento de Análisis Económico Aplicado
Keywords: Low-cost airlines | Pricing strategies | Yield management | Internet
Knowledge Area: Economía Aplicada
Issue Date: 2016
Publisher: SAGE Publications
Citation: Tourism Economics. 2016, 22(2): 293-310. doi:10.5367/te.2016.0551
Abstract: In recent decades, the air transport sector has experienced major changes, including the emergence of the low-cost airlines. The strategies adopted by these new companies have given rise to a revitalization of the sector, particularly in Europe and the USA. This article analyses the pricing strategy followed by the low-cost carriers based on Porter's analysis. The research is based on the study of a total of 90 traditional tourist routes between the UK and Spain. As in previous studies, the high level of concentration and advance purchase of fares are the most important components explaining the price dispersion. However, the methodology used (principal component analysis + panel) has generated another series of highly interesting results regarding the role of the Internet and tourism in price setting which require further in-depth study.
Sponsor: This research has been carried out within the framework of the project ‘New approaches for tourism destinations planning and management: conceptualization, case studies and problems. Definition of smart tourist destinations models’ (CSO2014-59193-R) under the Spanish National R&D&I Plan financed by the Ministry of Economy and Competitiveness. It was made possible by the support of the Institute of International Economics (IEI) at the University of Alicante.
URI: http://hdl.handle.net/10045/62743
ISSN: 1354-8166 (Print) | 2044-0375 (Online)
DOI: 10.5367/te.2016.0551
Language: eng
Type: info:eu-repo/semantics/article
Rights: © 2016 by SAGE Publications
Peer Review: si
Publisher version: http://dx.doi.org/10.5367/te.2016.0551
Appears in Collections:INV - INNATUR - Artículos de Revistas
INV - Internacionalización de la Empresa y Comercio Exterior - Artículos de Revistas

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