A Guide to Reporting on Airline Dynamic Pricing

Reporting has been a challenge for providers of airline dynamic pricing (“revenue management”) systems from the initial launch of the systems decades ago. Naturally, dynamic pricing systems initially focused on their proprietary models often hidden behind complex algorithms, and business reporting seemed an afterthought. Somewhat slowly, vendors supplemented their systems with reports and alerts, mostly directed toward “flags” that might trigger analyst interventions:

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Pulling Back the Curtain on Airline Dynamic Pricing

Dynamic pricing has gotten extremely sophisticated – and complicated. For airlines, dynamic pricing relies on a series of algorithms to determine the optimal number of seats to be allocated to different fares or fare classes. The algorithms are generally not completely transparent, and there are literally millions of calculations that are updated nightly to insure allocations remain up-to-date. 

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Finding More Seats for High Fare Airline Passengers

Airline load factors are at record levels – many airlines average 80-90% loads on flights over a year. On all flights projected to be full, airlines strive to set aside enough seats for high fare passengers who often book close-in. Many studies have shown the disproportionate importance of high fare passengers on airline profitability so all airlines have a clear focus on these customers. On high-demand flights, airlines may reserve ten or more seats for passengers who don’t book until the week before departure. 

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