Dynamic pricing of opaque airline tickets

Several Internet travel providers have introduced a business model that revolves around selling an opaque product. This paper gives an overview of this practice in the airline industry to supplement existing distribution channels and to reach previously under-served, price-sensitive customers. It also provides an approach to design a decision-support system for dynamically pricing opaque products to fit prevailing market conditions by studying customer purchase behaviour and exploiting the interactive nature of the Internet. An application of this dynamic pricing approach provides about 48 per cent additional revenue benefit from selling opaque products compared to the traditional static pricing approach.