Reckon you know about dynamic pricing in travel? Think again. Last week, Delta had a “computer malfunction” which resulted in fares being offered at some ridiculous prices.
In some case tickets were available 10-15% of the normal price. This should remind us all that airline pricing is very complex and fragile. As we end a rather boring year for innovation, it is time to look to the future and face some of the hard questions that are impacting the retailing of air tickets. Background The internet is a wondrous thing – it enables us to have an eye on something that was (and in many cases still) is hidden, namely pricing.
Modern retailing has evolved rapidly and continues to change as the ping pong battle between the buy side and the supply side of the purchase line moves to real time. The consumer has so many more tools to see what a price is today, yesterday, here and now, down the street or even being sold somewhere else around the world. But does this matter to travel – the ultimate, dynamic product? Dynamism Airline prices are complex things. Reality. Revenue Management Revolution. Revenue Management Evolves Revenue management and pricing tactics have been instrumental in enhancing transportation operators’ revenue per available seats.
However, if the foundations of revenue management are still applicable, several key evolutions since its creation and development have not been, or only partially been, captured today. A significant limitation of all pricing and revenue management solutions today is that they mostly address the visible part of the demand but not the total multimodal demand (air, rail, bus and car). While customers, at the same time, make travel decisions based on a comparison of the cost and benefits of each means of transportation. Going for a short holiday weekend, today’s travellers compare destinations with length and cost of travel.
For example, in Western Europe, most customers have the choice of travelling by air, high-speed rail or highways — either by car or express bus — to a wide area of destinations. Image Gallery. Part One of Three: A guide to traditional vs dynamic pricing in travel. Pricing in travel has always been based on the principle of re-creation of results.
This affects airlines and other travel products such as hotels, cars and tours. The notion of re-creation of results is fundamentally a bad idea, but one that works. Why would you let anyone else be responsible for pricing of your product? But that is indeed how travel works. Air fares in the US, for example, are filed with ATPCO and control rests with the state of availability. The approved parties that can create offers are then charged with taking the mind-numbing complexity of possible fare combinations to create an offer aligned to the availability. The airlines police it by setting penalties if you get it wrong – known as the infamous ADM (agent debit memo). Members.pricingsociety.com/articles/how-to-respond-to-dynamic-pricing-nick-wreden-may-2003.pdf. Revenue Management And Dynamic Pricing Part I. Vita.mcafee.cc/PDF/DynamicPriceDiscrimination.pdf. What is Dynamic Pricing? Avoid Paying Higher Prices Shopping Online. What Is Dynamic Pricing? Amazon's 'dynamic' prices get some static.
Amazon.comNancy Plumlee wanted to buy a mahjong set on Amazon.com, but was shocked to find that the price of the game she chose rose twice -- once by $16 -- after she'd dropped it into her virtual shopping cart.
Nancy Plumlee planned to teach a few pals how to play mahjong, a Chinese game of tiles similar to rummy. She browsed Amazon.com and, after sifting through several pages of options, settled on a set for $54.99. She placed it in her virtual basket and continued shopping for some scorecards and game accessories. A few minutes later, she scanned the cart and noticed the $54.99 had jumped to $70.99. Plumlee thought she was going crazy. That, my dear readers, is why it's important to scan prices before you click "order. " "That just doesn't feel like straight-up business honesty. Although consumers say such price revisions feel like bait-and-switch, they're entirely legal. Still sound fishy? Another caller last week said she's a regular user of online genealogy sites.