Customized dynamic pricing of airline fare products

Wittman, Michael D.; Belobaba, Peter

doi:10.1057/s41272-017-0119-8

Cited by 25 publications

(24 citation statements)

References 34 publications

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“…Dynamic pricing through a fixed number of fare products, with individually tailored pricing by operators to consumers soon to be implemented (Wittman & Belobaba, 2018) Cooperation flexibility Allows any airline to in principle cooperate with any other airline, (subject to antitrust) to develop cooperation agreements…”

Section: Pricing Flexibilitymentioning

confidence: 99%

Collaboration as a service (CaaS) to fully integrate public transportation – Lessons from long distance travel to reimagine mobility as a service

Merkert

Bushell

Beck

2020

Transportation Research Part A: Policy and Practice

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Integrated mobility aims to improve multimodal integration to make public transport an attractive alternative to private transport. This paper critically reviews extant literature and current public transport governance frameworks of both macro and micro transport operators. Our aim is to extent the concept of Mobility-as-a-Service (MaaS), a proposed coordination mechanism for public transport that in our view is yet to prove its commercial viability and general acceptance. Drawing from the airline experience, we propose that smart ticketing systems, providing Software-as-a-Service (SaaS) can be extended with governance and operational processes that enhance their ability to facilitate Collaboration-as-a-Service (CaaS) to offer a reimagined MaaS 2.0 = CaaS + SaaS. Rather than using the traditional MaaS broker, CaaS incorporates operators more fully and utilises their commercial self-interest to deliver commercially viable and attractive integrated public transport solutions to consumers. This would also facilitate more collaboration of private sector operators into public transport with potentially new opportunities for taxi/rideshare/bikeshare operators and cross geographical transport providers (i.e. transnational multimodal operating companies) to integrate.

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Section: Pricing Flexibilitymentioning

confidence: 99%

Collaboration as a service (CaaS) to fully integrate public transportation – Lessons from long distance travel to reimagine mobility as a service

Merkert

Bushell

Beck

2020

Transportation Research Part A: Policy and Practice

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show abstract

“…Since airlines still use a finite, pre-determined set of possible price points (and existing pricing and revenue management techniques) to complete their initial price selection, and since some customers may be shown an unadjusted fare, this mechanism represents an example of dynamic price adjustment. Recent research has suggested that this type of dynamic pricing could lead to revenue benefits for airlines (Wittman and Belobaba, 2018;Kumar et al, 2018).…”

Section: Figure 2: Schematic Of Dynamic Price Adjustmentmentioning

confidence: 99%

Dynamic pricing mechanisms for the airline industry: a definitional framework

Wittman

Belobaba

2018

J Revenue Pricing Manag

Self Cite

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The phrase "dynamic pricing" has entered the airline revenue management lexicon in recent years with the emergence of new distribution capabilities that could allow airlines to adjust ticket prices more frequently. Yet each airline, vendor, and academic has a unique (and often incongruous) view of what dynamic pricing encompasses. To date, there has not been a definition of dynamic pricing proposed in the literature that clearly delineates how these mechanisms are different from traditional airline pricing and revenue management. In this paper, we propose a definitional framework for dynamic pricing for the airline industry. After providing a general definition of dynamic pricing, we describe three mechanisms for price selection-assortment optimization, dynamic price adjustment, and continuous pricing. Depending on the implementation and the information available to the airline at the time of pricing, each of these mechanisms could be used to adjust prices relatively infrequently or, at the limit, on a transaction-by-transaction basis. We close by linking recent technological developments in airline pricing, revenue management, and distribution to the three mechanisms introduced in the framework.

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“…Unlike the paper below, this model assumed that airlines had information about competitors' schedule quality, as well as true willingness-to-pay parameters for each customer type. Wittman and Belobaba (2017) introduced a dynamic price adjustment model called PFDynA, which applies increments or decrements to pre-filed fares in certain situations based on estimates of customer WTP. PFDynA also assumes that airlines can segment incoming booking requests into two types: leisure passengers (who typically have a lower willingness-to-pay) and business passengers (who typically have a higher willingness-topay).…”

Section: Dynamic Pricing With Airline Revenue Managementmentioning

confidence: 99%

“…In our model, we assume that the bid price is output from a traditional airline RM system. As in past DPE models (Fiig et al, 2016;Wittman and Belobaba, 2017), the bid price is an input into the dynamic pricing equation, and not the output of a simultaneous optimization of price and availability. This allows dynamic price adjustment to be used with any existing airline RM system that outputs a bid price.…”

Section: Dynamic Pricing Of Individual Flightsmentioning

confidence: 99%

“…A DPE is a dynamic price adjustment mechanism which increments or discounts the pre-filed fares that would ordinarily be offered by a RM system (Ratliff, 2017). Several different DPE methodologies for dynamically altering filed fares have been proposed, including rules-based engines (Fiig et al 2016); a "virtual mark-up" methodology for increasing prices (Ratliff, 2017), and algorithmic approaches based on RM bid prices and estimates of customer WTP (Wittman and Belobaba, 2017).…”

Section: Introductionmentioning

confidence: 99%

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A dynamic pricing engine for multiple substitutable flights

Wittman

Fiig²,

Belobaba

2018

J Revenue Pricing Manag

Self Cite

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Ph.D. in Air Transportation Systems from MIT, where his research focused on dynamic pricing in airline revenue management, airport connectivity, and airline business strategies in the U.S. His work has been cited by Congress and featured in numerous international media outlets. He recently started in a new role at Amadeus's Revenue Management Competency Center in Copenhagen, Denmark, where he works on research and development of new revenue management methodologies.

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Customized dynamic pricing of airline fare products

Cited by 25 publications

References 34 publications

Collaboration as a service (CaaS) to fully integrate public transportation – Lessons from long distance travel to reimagine mobility as a service

Collaboration as a service (CaaS) to fully integrate public transportation – Lessons from long distance travel to reimagine mobility as a service

Dynamic pricing mechanisms for the airline industry: a definitional framework

A dynamic pricing engine for multiple substitutable flights

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