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

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Journal of Revenue and Pricing Management Aims and scope

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.

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Authors and Affiliations

  1. exeo Strategic Consulting AG, Wittelsbacherring 24, 53115, Bonn, Germany

    Andreas Krämer

  2. QUINTA Consulting, Textorstr. 73, 60594, Frankfurt a. M, Germany

    Mark Friesen

  3. TNS Pricing and Revenue Management Consulting LLC, 1835 16th Street NW, Washington, DC, 20009, USA

    Tom Shelton

Authors
  1. Andreas Krämer
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  2. Mark Friesen
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  3. Tom Shelton
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Corresponding author

Correspondence to Andreas Krämer.

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Krämer, A., Friesen, M. & Shelton, T. Are airline passengers ready for personalized dynamic pricing? A study of German consumers. J Revenue Pricing Manag 17, 115–120 (2018). https://doi.org/10.1057/s41272-017-0122-0

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  • DOI: https://doi.org/10.1057/s41272-017-0122-0

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