Abstract
Pricing and product policy in the airline industry is very complex and different from other industries, thus a successful airline has to manage its products and pricing perfectly, otherwise it will not succeed on the extremely competitive airlines market. This paper has two main goals, firstly to generally define product policy and secondly to show the product policy of airlines. Currently, airlines operate in a very competitive industry with little to no option to differentiate their product which leads to low profitability. New Distribution Capability and another new technology have the potential to increase airlines’ revenue by better price discrimination and more personalization.
Highlights
Pricing and product policy in the airline industry is very complex and different from other industries, a successful airline has to manage its products and pricing perfectly, otherwise it will not succeed on the extremely competitive airlines market
1.Definition of product policy According to Kollar (2003), product policy is a key issue in a maintainable marketing plan and the enterprise's product policy is defined by changes in supply that come from developing new products, changing properties of existing products, or otherwise
The development of the New Distribution Capability means that airlines may not unavoidably need to retain pre-filed fare structures when practicing continuous pricing
Summary
According to Belobaba et al (2017) the airline’s objective in establishing a differentiated fare structure is to offer a wide enough range of fare product options with different price levels to capture as much potential revenue as possible, while targeting each fare product to specific demand segments with different levels of willingness to pay. Airlines could use a continuous pricing engine to choice which precise price to make available This could be a cumbersome process, as the sheer amount of possible currency values would require significant improvements to the capabilities of existing RBDs. Alternatively, the development of the New Distribution Capability means that airlines may not unavoidably need to retain pre-filed fare structures when practicing continuous pricing. These pre-constructed offers could be dynamically priced (Belobaba et al 2017)
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