State of the art of pricing policy in air transportation: network carriers vs. low-cost airlines

The modern air transport industry is highly competitive. To survive in
the market, the implementation of a successful marketing strategy is
fundamental. In particular, an effective pricing policy has become
crucial for airlines to remain profitable. Correspondingly, the different
types of airline in the market have also established very distinct pricing
policies. The present study is based on a literature review and presents
the state of the art of pricing policy in air transportation. The aim is to
compare and discuss the pricing strategies of network carriers and lowcost airlines. Special attention is paid to Revenue Management, which
is a very important management tool used by airlines to take advantage
of the differences in willingness to pay of passengers. The pricing policy,
however, depends on the overall business strategy of the airline.
Results show many differences, resulting from the fact that these two
types of airline are characterized by very different fundamental
business models and, correspondingly, also target groups. Since
network carriers and also low-cost airlines have adjusted their pricing
strategies lately, these recent developments will be discussed as well.
This paper adds to the knowledge of this topic because it presents the
most up-to-date and complete study on pricing regarding network
carriers vs. low-cost airlines.