Variable opaque products in the airline industry: A tool to fill the gaps and increase revenues

This article presents a new airline product class termed variable opaque product, VOP. What distinguishes a VOP is that the passenger self-selects the travel product based on how much uncertainty she is prepared to accept in one or more product attributes: for example, to which destination she wishes to fly or for which dates she requires the outbound and inbound flights. VOPs have been tested at two airlines in dissimilar markets and geographic regions and it was found that, in each case, the VOP made a significant increase in revenues and there was no competitive response to its introduction (Mang et al, 2009). This article extends on this previous research and presents a pricing heuristic that maximizes the incremental revenues from a VOP.