Abstract
Recent advancements in airline distribution technology, including IATA’s New Distribution Capability (NDC), could offer airlines a wealth of information about the characteristics of individual customers arriving to book. Recent literature has envisioned a world where airlines, enabled by this new distribution technology, are able to make personalized fare quotes in real time, effectively heralding the end of traditional booking classes. However, academic literature suggests that this type of price discrimination may intensify competition and lead to lower revenues for firms. In this article – the first in a series of papers exploring models of dynamic product availability with knowledge of customer characteristics – we test a simple dynamic availability (DynA) heuristic that adjusts fare class availability after inheriting information about a customer’s trip purpose. Through results from the Passenger Origin-Destination Simulator, we find that this DynA heuristic is often revenue-negative for airlines and unstable in competitive environments. The results raise questions about airline benefits from simple approaches to personalized pricing enabled by NDC, and open up opportunities for future research regarding more nuanced and advanced strategies for customized pricing and availability in the airline industry.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
