Abstract
Several Internet travel providers have introduced a business model that revolves around selling an opaque product. This paper gives an overview of this practice in the airline industry to supplement existing distribution channels and to reach previously under-served, price-sensitive customers. It also provides an approach to design a decision-support system for dynamically pricing opaque products to fit prevailing market conditions by studying customer purchase behaviour and exploiting the interactive nature of the Internet. An application of this dynamic pricing approach provides about 48 per cent additional revenue benefit from selling opaque products compared to the traditional static pricing approach.
Similar content being viewed by others
References
Allison, P. D. (2001) Logistic Regression Using SAS System: Theory and Applications. Cary, NC: SAS Institute Inc.
Chen, Y. and Iyer, G. (2002) Consumer addressability and customized pricing. Marketing Science 21 (2): 197–208.
Dolan, R. J. and Moon, Y. (2000) Pricing and Market Making on the Internet. Harvard Business School Study, 9-500-065.
Quinby, D. (2008) Airline First Half 2008: Amid a Dismal Year, Online Shopping, Booking Grows While Revenue Slows. PhoCusWright's DATA POINT, September 2008.
Rao, B. V. and Smith, B. C. (2006) Decision support in online travel retailing. Journal of Revenue and Pricing Management 5 (1): 72–80.
Smith, B. C., Darrow, R., Elieson, J., Guenther, D., Rao, B. V. and Zouaoui, F. (2007) Travelocity becomes a travel retailer. Interfaces 37 (1): 68–81.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Zouaoui, F., Venkateshwara Rao, B. Dynamic pricing of opaque airline tickets. J Revenue Pricing Manag 8, 148–154 (2009). https://doi.org/10.1057/rpm.2008.50
Published:
Issue Date:
DOI: https://doi.org/10.1057/rpm.2008.50