EasyJet Pricing Strategy: Determinants and Developments

The aim of this study is to analyse the price policy adopted by easyJet, the second most relevant low-cost carrier in Europe. The paper builds on a dataset including the fares of all easyJet flights from 2006 to 2012. For each flight, we measure average fares and dynamic pricing activities over a period of 90 days before departure. Those price information are first regressed to a set of explanatory variables relating to routes, airports, served territories and competition. Preliminary results show a positive correlation between the average price of each route and its length and the frequency. We also find a significant negative correlation between competition, measured both on a direct and indirect base, and average fares. With reference to the intensity of the dynamic pricing activities, the correlation to route length and the frequency of flights is negative. We find that greater competition also comes with higher discounts given on advance bookings. We compare our results with those obtained by literature analysing other major European low-cost carriers. The second part of the paper deals with the developments observed in the easyJet fares strategy regarding both average fares and discounts for advanced bookings. We find different fare reactions to the 2009 and 2012 crisis in the European air transport industry.