Continuous pricing (also called total dynamic pricing) is the process of dynamically adjusting airfares in response to contextual signals. IATA defines it as “an evolution of dynamic pricing which allows an airline to provide indefinite price points.”
Thus, continuous pricing is designed to overcome the limit of 26 price points for all fare buckets, allowing airlines to achieve greater granularity in pricing, increase personalization, and constantly adapt to supply and demand.
Continuous pricing can introduce the following improvements:
- better understanding of customer’s willingness to pay,
- increased conversion,
- holistic revenue management, etc.
With continuous pricing, both fares and offer content are defined on the go, data analytics and ML models are involved in decision making, and airlines have full control over how their data is displayed on GDSs, OTAs, and aggregators. As of now, continuous pricing is at very early stages of adoption with Lufthansa Group being one of the pioneers of this initiative.