Research On Domestic Passengers Transportation Pricing Strategy Of Shandong Airlines

Shandong Airlines is a local corporation and it was founded in 1994.Its headquarters is at Jinan Shandong Province. It is expanding rapidly since it has been founded. Lately, along with development and innovation of civil aviation, the competition is very fierce in air passenger transportation market. When price control relaxed in 2002, price war broke out fiercely. Profit being less and less, Shandong Airlines' expanding is restricted. Creating profit is Shandong Airlines' fundamentality and ultimate objective for existing and expanding persistently. In this position, pricing strategy is very important. Because of the difference between domestic market and foreign market, the advanced revenue management in international market is of no effect in domestic market. Shandong Airlines must seek a pricing strategy that can adapt to domestic air passenger transportation market for the marketing strategy objective -long-term profit.The methods of market research, theoretical analysis, mathematical statistics and model analysis have been used in the paper. The writer adopts the theory of strategic pricing and game theory, est. to study the pricing strategy for Shandong Airlines. This paper analyzes the environment of domestic air passenger transportation market, the cause of the price war, and the reason of the revenue management's unfitness in domestic market. According to the analysis of Shandong Airlines' pricing strategy in being, the problems of pricing decision-making are found.Using the theory of strategic pricing and analyzing three factors-cost, passengers and competition ,that can influence Shandong Airlines' pricing strategy, the paper establishes the models of cost-based pricing and competition-based pricing for profit maximization. And dynamic pricing strategy is selected.In this paper, a process of pricing decision-making in Shandong Airlines is designed, and measures for pricing strategy executing are worked out. The study result is not only good for Shandong Airlines, but also will be beneficial to other airlines' making of pricing strategy.