Science, Space and Technology News 2023
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The same can happen with plane tickets: When people visit a website such as Google Flights or Kayak and search for a ticket, a wide range of different flights from the same airline appear. Travelers tend to make selections that balance convenience and price: The price of one flight might push people to select a slightly less convenient but cheaper flight.
Despite how it may appear when looking for flights, airlines have a fixed and relatively small number of prices that they assign to tickets on each flight. Unlike other consumer sectors, where pricing can be adjusted and targeted down to the penny, airlines operate with large gaps between each possible price—sometimes upwards of $100. They may sell the first 30 economy tickets at the lowest price, and then the next 30 tickets at the next possible price, and so on.
Today, airlines are starting to experiment with what’s known as “continuous revenue management,” which would, for instance, assign 100 different prices to a flight with 100 seats. “That would make pricing significantly more variable,” Natan says, “but even that would not be the kind of targeting that many consumers assume airlines use.”One of the strangest discoveries from the research relates to the process airlines use to set their prices.
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