Principles of Economics
Principles of Economics
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The key points that the article highlights
The article chosen is on the pricing strategies of low cost airlines. Low cost airlines are an implication that airlines have low costs rather than low fares. They optimize the principle that the lower the costs the higher the chances of making profits. The article highlights that the pricing strategies for airline industry are extremely flexible. The flexibility of the pricing strategies comes due to the nature of the demand and supply in the airline industry. BBC research suggests that the fares fall and rise many times during the period leading to a flight. It argues that airlines try to fill seats rather than maximize profits (Malighetti, Paleari, & Redondi, 2009). This is a classical demand management since when the airline is below the rate of booking then the management reduces the fares and when the airplane is above the target for passengers buying seats then the management increases the fares………………
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