(Realtime) dynamic pricing in an integrated revenue management and pricing environment: An approach to handling undifferentiated fare structures in low-fare markets

This paper compares the traditional pricing procedure of network carriers using fare products defined by rules and restriction with the concept of dynamically adjusting prices based on current market conditions. It describes why traditional revenue management procedures and algorithms fail in a fenceless environment typical of low–fare carriers. The paper attempts to explain how a dynamic pricing concept based on willingness to pay could form the basis of a long–term revenue management solution for various types of airlines, from low–fare carriers to network carriers. The concept requires significantly more integrated business processes between pricing and revenue management and therefore demands a new and future–oriented approach to revenue optimisation.