If you offer the $100 fare and the passenger was willing to pay $125, you lose $25 in revenue opportunity. Think about a scenario where you have a filed fare at $100 and another at $150. This group thinks that having filed fares simply leaves money on the table for the airline. What is Airline Continuous Pricing?įor many people in the airline industry, the conversation around dynamic pricing focuses on the filed fares mentioned above. But the ultimate goal where we are headed is to do the combination of both. This diagram illustrates that you can have personalized (context-specific) pricing without continuous pricing, and you can have continuous pricing without personalized (context-specific) pricing. To fully realize and understand the concept of airline dynamic pricing, you have to understand its two parts: Continuous Pricing and Personalized or Context-Specific Pricing. For airlines that transition to a continuous pricing model, RTDP also operates free of the RBD, enabling truly dynamic pricing regardless of class. In this use-case of RTDP, we are working within the constraints of the Reservation Booking Designator (RBD). This is a great starting point for airline dynamic pricing, and the industry has continued to update its thinking on the subject over the years. By changing the lowest available class, you would be changing the price that the passenger pays, even when the price is still one of those fixed price points filed by the airline. RTDP can be used to change the lowest available class in real-time, based on characteristics of the request like market, point of sale, itinerary, routing, etc. When PROS released our Real-Time Dynamic Pricing (RTDP) product people asked what we meant by ‘dynamic pricing’. When you pair those filed fares with advanced purchase restrictions and other fences, it certainly doesn’t make them sound very dynamic. Just as the name implies, airlines have filed those price points in advance and those are the only prices available to the market. When we think about the concept of airline pricing, we often think about the inherent static nature of the filed fares. Let’s think critically about the word “dynamic,” meaning constant change. However, the definition of dynamic pricing varies across people and carriers of different sizes and business models. Whether you are talking to airlines about the future of revenue management, attending conferences, or reading research, airline dynamic pricing comes up everywhere. The topic of airline dynamic pricing across seats and ancillaries has taken the industry by storm in the last few years.
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