OnDemand WTP Pricing Research

Air New Zealand considers dynamic pricing for flights | TravelTalk NZ

How airlines set pricing is something that hasn’t fundamentally changed in decades. It follows a model known as a “pricing ladder” where the total number of seats are divided up into booking classes, with each booking class representing a rung on the ladder.  The lowest rung on the ladder will have the cheapest prices, and the highest rung will have the highest price.

Each booking class has its own fixed price point, and as the seats in each booking class are sold, the price goes up as the customer will need to buy a ticket from the next booking class (the next rung on the ladder) at a higher fare price. A typical flight can easily contain 15 or 20 different booking classes, each with its own unique letter of the alphabet to differentiate it.

Due to the complexities of this system and how airline tickets are sold through GDS (Global Distribution Systems) platforms, the only way an airline can really change pricing for an event such as a concert or school holidays is to remove availability of lower value booking classes, or if they’ve got excess seats they can add extra availability of lower booking classes.

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Air New Zealand considers dynamic pricing for flights | TravelTalk NZ.

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