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Dynamic pricing of airline offers

Author

Listed:
  • Thomas Fiig

    (Amadeus Airline IT)

  • Remy Guen

    (Amadeus Airline IT, Amadeus S.A.S.)

  • Mathilde Gauchet

    (Amadeus Airline IT, Amadeus S.A.S.)

Abstract

Airlines have started to focus on expanding their product offerings beyond flights to include ancillary products (e.g., baggage, advance seat reservations, meals, flexibility options), as well as third-party content (e.g., parking and insurance). Today, however, offer creation is rudimentary, managed in separate processes, organizations, and IT systems. We believe the current approach is inadequate and that the key to profitability is to manage offers consistently in an integrated Offer Management System (OMS). However, realizing this vision, will require significant advancements in the science of pricing and in distribution. The entire scope of an OMS cannot be covered in a single paper. Hence, to provide depth, we will focus on what we believe is one of the most critical components of the OMS—Dynamic Pricing of airline offers. Finally, we discuss various industry initiatives that will enable deployment of Dynamic Pricing of the flight product alone or the broader scope of OMS.

Suggested Citation

  • Thomas Fiig & Remy Guen & Mathilde Gauchet, 2018. "Dynamic pricing of airline offers," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(6), pages 381-393, December.
    • Handle: RePEc:pal:jorapm:v:17:y:2018:i:6:d:10.1057_s41272-018-0147-z
    DOI: 10.1057/s41272-018-0147-z
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    References listed on IDEAS

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    Cited by:

    1. MadhuSudan Rao Kummara & Bhaskara Rao Guntreddy & Ines Garcia Vega & Yun Hsuan Tai, 2021. "Dynamic pricing of ancillaries using machine learning: one step closer to full offer optimization," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 646-653, December.
    2. Ziaul Haq Adnan & Ertunga Özelkan, 2019. "Bullwhip effect in pricing under different supply chain game structures," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(5), pages 393-404, October.
    3. Stacey Mumbower & Susan Hotle & Laurie A. Garrow, 2023. "Highly debated but still unbundled: The evolution of U.S. airline ancillary products and pricing strategies," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(4), pages 276-293, August.
    4. Kevin K. Wang & Michael D. Wittman & Adam Bockelie, 2021. "Dynamic offer generation in airline revenue management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 654-668, December.
    5. Daniel Schubert & Christa Sys & Rosário Macário, 2022. "Customized airline offer management: a conceptual architecture," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(5), pages 553-563, October.
    6. Octavian Oancea, 0. "Optimizing airline fare structures," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 0, pages 1-4.
    7. Masoud Talebian & Zhaolin Li & Qiang Lu, 2020. "Pricing and inventory management for mixed bundled products with stochastic demand," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 401-410, December.
    8. Amine Dadoun & Michael Defoin-Platel & Thomas Fiig & Corinne Landra & Raphaël Troncy, 2021. "How recommender systems can transform airline offer construction and retailing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(3), pages 301-315, June.
    9. Muzaffer Buyruk & Ertan Güner, 2022. "Personalization in airline revenue management: an overview and future outlook," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 129-139, April.
    10. Octavian Oancea, 2020. "Optimizing airline fare structures," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(4), pages 230-233, August.
    11. Kevin K. Wang & Michael D. Wittman & Thomas Fiig, 2023. "Dynamic offer creation for airline ancillaries using a Markov chain choice model," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(2), pages 103-121, April.
    12. Sébastien Touraine, 2021. "The industry transformation to dynamic offering," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 611-614, December.

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