Pricing strategy of low cost airlines

1. Introduction Low cost airlines such as EasyJet, and Ryanair have developed quickly in the European market in the last five years. The UK market has seen the most dramatic development where by the summer of 2001, these carriers accounted for over 22% of the short haul capacity from London and were present in 58% of the 128 short haul routes operated from this city (source: OAG, 2001). During a five-year period from 1997, the seat capacity offered from London has risen …

…Summer of 2002 both British Airways and bmi British Midland switched their pricing strategies in their short haul domestic and European markets to copy the pricing models used by the low cost airlines . Some would suggest a success for consumer welfare over perhaps outmoded business practices. References OAG (2001), Official Airline Guide Timetable, June. EasyJet (2001), Company Report Ryanair (2001), Annual Company Report CAA (2002), Passenger surveys at London supplied on request to Cranfield University. Post September 11th Fare differences