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

Mark Friesen et al. (Journal of Revenue Pricing Management, Vol. 17, No. 2, p. 115-120)

Today, dynamic pricing in most industries is an established form of pricing. The technological changes (NDC, Big data, IoT, etc.) in the airline industry allow further steps for price differentiation culminating in either personalized or personalized dynamic pricing. Personalized dynamic pricing as we define it is not to be confused with the traditional dynamic pricing of today‘s Revenue Management practices. This paper explores the factors influencing the successful introduction of personalized dynamic pricing at the example of the German airline market: (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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