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Are airline passengers ready for personalized dynamic pricing? A study of German consumers

Author

Listed:
  • Andreas Krämer

    (exeo Strategic Consulting AG)

  • Mark Friesen

    (QUINTA Consulting)

  • Tom Shelton

    (TNS Pricing and Revenue Management Consulting LLC)

Abstract

Today, dynamic pricing (DP) in most industries is an established form of pricing, and supported by the DP functionality of many revenue management (RM) systems and the general simplification of airline pricing driven by low-cost carriers. The technological changes (NDC, Big data, IoT, etc.) allow further steps for price differentiation culminating in either personalized or personalized dynamic pricing (PDP). PDP as we define it is not to be confused with the traditional DP of today‘s RM practices. Whether appropriate strategies for a 1:1 price setting can be successfully implemented in the market, depends on several factors: (1) technological advances in data mining and the ability to detect customer preferences (2) the ability to accurately determine customer’s willingness-to-pay by predictive analytics; (3) the use of personal data by airlines and its acceptance by consumers as well as (4) the medium-term impact on customer loyalty and the associated risks for the sustainability of the whole airline business model.

Suggested Citation

  • Andreas Krämer & Mark Friesen & Tom Shelton, 2018. "Are airline passengers ready for personalized dynamic pricing? A study of German consumers," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(2), pages 115-120, April.
    • Handle: RePEc:pal:jorapm:v:17:y:2018:i:2:d:10.1057_s41272-017-0122-0
    DOI: 10.1057/s41272-017-0122-0
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    References listed on IDEAS

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    Cited by:

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    2. 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.
    3. Ren, Xinhui & Pan, Na & Jiang, Hong, 2022. "Differentiated pricing for airline ancillary services considering passenger choice behavior heterogeneity and willingness to pay," Transport Policy, Elsevier, vol. 126(C), pages 292-305.
    4. Mark Friesen & Giuliano Mingardo, 2020. "Is Parking in Europe Ready for Dynamic Pricing? A Reality Check for the Private Sector," Sustainability, MDPI, vol. 12(7), pages 1-11, March.
    5. Shobhana Chandra & Sanjeev Verma, 2023. "Big Data and Sustainable Consumption: A Review and Research Agenda," Vision, , vol. 27(1), pages 11-23, February.
    6. Manuela Rozalia Gabor & Mihaela Kardos & Flavia Dana Oltean, 2022. "Yield Management—A Sustainable Tool for Airline E-Commerce: Dynamic Comparative Analysis of E-Ticket Prices for Romanian Full-Service Airline vs. Low-Cost Carriers," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    7. Jianyu Xu & Yu-Xiang Wang, 2021. "Logarithmic Regret in Feature-based Dynamic Pricing," Papers 2102.10221, arXiv.org, revised Oct 2021.
    8. Yuqi Peng & Mark Ferguson & Övünç Yılmaz, 2023. "Airline revenue management around sporting mega-events: an application using data from the Super Bowl XLIX," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(3), pages 188-200, June.
    9. Rui Qi & Dan Jin & Han Chen & Xichen Mou & Faizan Ali, 2024. "Strategic-level perceived fairness of hotel dynamic pricing: the role of cues and the asymmetric moderating effect of inflation attribution," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(3), pages 249-261, June.
    10. Anshu Agrawal, 2021. "Sustainability of airlines in India with Covid-19: Challenges ahead and possible way-outs," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(4), pages 457-472, August.

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