The discussion of revenue management by humans reminded me of overbooking management by humans. At Northwest Airlines, as well as others, those people were pretty darn good at predicting no-shows, flight-by-flight, all week long throughout the year. For example, they didn't overbook a Friday 5 pm departure to La Guardia while they knew exactly how much to overbook other flights.
The one flight that consistently confounded them was NW 21, a B747 that went MSP-LAX-HNL-NRT-HKG. For some reason never fathomed, some days LAX-HNL had over a hundred no-shows and some days it had over a hundred denied boardings and, to my recollection, nobody was able to break the code. Clearly something unforgettable, after so many years - I was in Maintenance & Engineering, so only an observer of this nearly-daily scandal, from the side. TR ---------------------------------------- *From: *Scott Gibson via Mifnet <[email protected]> *To: *[email protected] *CC: *Scott Gibson <[email protected]> *Date: *2026-06-10T12:42:08Z *Subject: *[Mifnet 🛰 76369] Re: Dynamic pricing democratized air travel? > I agree that it depends on the definition of dynamic pricing. The big > consumer value came from deregulation and the ability to compete based on > price (which also derivers more total industry revenue). Telling was the > first “biG’ pricing g move which was the “Super Saver” launched by American > Aiurlines in 1976. That $231 (midweek) roundtrip coast to coast fare was a > 45% reduction from the CAB set price. BTW, that is $1352 today. Not > surprisingly, demand exploded and airline profitability (by filling seats > that would otherwise go unsold driving incremental re3venue) improved. In > essence, this was already dynamic pricing (defining it was adjusting the fare > by demand) as it was the Tuesday and Wednesday (the slower travel days) price > with a higher weekend level. Over the 50 days since then, the industry has > managed to fill more seats (qa c0ombination of pricing, better seat > management tools allowing higher load factor realization plus aligning > capacity offered with demand but based on a cost-revenue trade-off). Creating > price points and rules to segment consumers by ability to pay/value of the > seat from a consumer perspective along with revenue management (predicting > demand by fare category, overbooking levels and O&D pricing being just some > of the tools) that have developed all of which to a degree are designed to > apply dynamic pricing (adjusting price in real time based on demand). The > development of RM tools upped the game and as technology further advances, > fryer gains (from an airline revenue generation) appear. But, this has been > incremental over decades and as a concept, dynamic pricing is not new at all. > In my early days at New York Air under the pricing freedom provided by > deregulation, our price levels varied greatly to try to fill every seat at > the highest price possible too make money. In the Washington National-Boston > market, I recall that our one way fares ranged from $29 (most available on. > Saturdays) to $189 (most seats on Friday, Sunday afternoon-evening and Monday > morning sold at this price). No RM system existed. So, this was humans > setting the number of seats by price point as the schedule loaded and then > managing the seats in real time based on what we saw from a bookings > perspective. The introduction of RM systems. (Especially PROS) upped the game > in perms of predicting demand and thus either releasing low fare seats or > removing them based on an expectation that the seat could be later sold at a > higher price fare). This is tough to do with just humans but systems allowed > both prediction b y flight (ie day of week, time of days, time of year, etc) > and then adjusting in real time based on actual demand versus the prediction. > In my mind, this is dynamic pricing but this in the last element in the > overall revenue generation )and profitability) equation. The first is > creating a schedule that offers a flight that aligns capacity with demand > (revenue not volume) and then pricing it correctly try and lastly managing > the inventory (how many seats offered on each flight at the various price > points with rules that try to separate consumer demand segments to best > capture the consumer value for the airline). While I haven’t seen any > analysis in decades as to the airline earnings value equation, my memory is > that the schedule (and that capacity-demand alignment) created over 80% of > the value, pricing another 10% and the “RM” process (which is what allows > dynamic pricing() was less than 5% (other factors being brand, loyalty, > product). > > Scott Gibson > >> On Jun 9, 2026, at 10:23 AM, Rudolf Zivcic via Mifnet >> <[email protected]> wrote: >> >> It kinda depends what is understood by "dynamic pricing" - currently it is >> almost assumed to be real-time adjustable and also continuous - all the >> fancy stuff of the day (and yes, ideally with AI in the background :)) >> But actually, anything else than flat price can be seen as dynamic price - >> and certain changes (dynamics) can happen based on time to >> departure/occupancy of the aircraft (load factor), day of week, season etc >> etc... >> >> To confirm what George posted - Deregulation and new entrant price >> competition lowered fares - that is actually a start of dynamic pricing (eg >> offering tickets at multiple price points, with their availability/price >> levels depending on departure dates/DOW/competitor landscape etc...) >> >> On the JumboJet - yes - with more capacity offered, there was a need to >> introduce discounted fare products, as filling the whole plane with only >> full-fares was (is) not possible under normal market conditions (and demand). >> >> So all in all, everyone is right :) >> >> My 2 cents, Rudo Zivcic >> >> >> On Tue, Jun 9, 2026 at 4:18 PM George Hamlin via Mifnet >> <[email protected]> wrote: >>> Deregulation and new entrant price competition lowered fares decades before >>> dynamic pricing came into play. >>> >>> On Jun 9, 2026 7:14 AM, Kathryn Creedy via Mifnet <[email protected]> >>> wrote: >>>> I'm reading a WaPo article on dynamic pricing at the grocery store and >>>> stumbled over this: >>>> John Zhang, a professor of marketing at the University of Pennsylvania’s >>>> Wharton School, said dynamic pricing helped democratize air travel by >>>> making it more affordable, >>>> >>>> Gee I thought it was the jumbo jet. What's your take? >>>> >>>> Cheers -- Kathryn >>>> -- >>>> >>>> >>>> >>>> Kathryn Creedy >>>> PHONE # 321 405 4395 >>>> US-Eastern Time Zone >>>> *Visit me on LinkedIn[https://www.linkedin.com/in/kbcreedy/] * >>>> * >>>> * >>> >>> -------------------------------------------------------------------------- >>> Revised: 20250507 >>> >>> You are receiving The Mifnet because you requested to join this list. >>> >>> The Mifnet is largely a labor of love, however the infrastructure isn't >>> exactly cost-free. If you'd care to make a small contribution to the >>> effort, please know that it would be greatly appreciated: >>> https://wardell.us/url/mifbit >>> >>> All posts sent to the list should abide by these policies: >>> >>> 1) List members acknowledge that participation in Mifnet is a >>> privilege--not a right. >>> 2) Posts are always off the record, absent specific permission from the >>> author. >>> 3) The tone of discussions is collegial. >>> 4) Posts are expected to be in reasonably good taste. >>> 5) We discuss ideas and not personalities, and we don't speak ill of other >>> Mifnet members. >>> >>> * The Mifnet WEB SITE is: >>>  https://www.mifnet.com/ >>> >>> * To UNSUBSCRIBE from this list at any time please visit: >>>  https://lists.mifnet.com/ >>>  OR: SEND THIS MESSAGE via email: >>> [email protected]?subject=leave[http://[email protected]/?subject=leave] >>> >>> * Send Mifnet mailing list POSTS/SUBMISSIONS to: >>>  [email protected] >>> >>> * You may reach the person managing The Mifnet at: >>>  [email protected] >>> >>> * Please consider the DIGEST version of The Mifnet, which consolidates all >>> list traffic into 1-3 >>>  messages daily. See instructions at: >>>  https://lists.mifnet.com/ >>> >>> * Manage your personal Mifnet SUBSCRIPTION at: >>>  https://lists.mifnet.com/ >>> >>> * For a list of all available Mifnet commands, SEND THIS MESSAGE via email: >>>  >>> [email protected]?subject=help[http://[email protected]/?subject=help] >>> >>> * View The Mifnet LIST POLICIES and PRIVACY POLICY at: >>>  https://mifnet.com/index.php/policies >>> >>> * View instructions for Mifnet DELIVERY PROBLEMS at: >>>  https://mifnet.com/index.php/delivery-problems >>> >>> * View The Mifnet LIST ARCHIVE at: >>>  https://lists.mifnet.com/hyperkitty/list/[email protected]/ >> -------------------------------------------------------------------------- >> Revised: 20250507 >> >> You are receiving The Mifnet because you requested to join this list. >> >> The Mifnet is largely a labor of love, however the infrastructure isn't >> exactly cost-free. If you'd care to make a small contribution to the effort, >> please know that it would be greatly appreciated: >> https://wardell.us/url/mifbit >> >> All posts sent to the list should abide by these policies: >> >> 1) List members acknowledge that participation in Mifnet is a privilege--not >> a right. >> 2) Posts are always off the record, absent specific permission from the >> author. >> 3) The tone of discussions is collegial. >> 4) Posts are expected to be in reasonably good taste. >> 5) We discuss ideas and not personalities, and we don't speak ill of other >> Mifnet members. >> >> * The Mifnet WEB SITE is: >>  https://www.mifnet.com/ >> >> * To UNSUBSCRIBE from this list at any time please visit: >>  https://lists.mifnet.com/ >>  OR: SEND THIS MESSAGE via email: >> [email protected]?subject=leave >> >> * Send Mifnet mailing list POSTS/SUBMISSIONS to: >>  [email protected] >> >> * You may reach the person managing The Mifnet at: >>  [email protected] >> >> * Please consider the DIGEST version of The Mifnet, which consolidates all >> list traffic into 1-3 >>  messages daily. See instructions at: >>  https://lists.mifnet.com/ >> >> * Manage your personal Mifnet SUBSCRIPTION at: >>  https://lists.mifnet.com/ >> >> * For a list of all available Mifnet commands, SEND THIS MESSAGE via email: >>  [email protected]?subject=help >> >> * View The Mifnet LIST POLICIES and PRIVACY POLICY at: >>  https://mifnet.com/index.php/policies >> >> * View instructions for Mifnet DELIVERY PROBLEMS at: >>  https://mifnet.com/index.php/delivery-problems >> >> * View The Mifnet LIST ARCHIVE at: >>  https://lists.mifnet.com/hyperkitty/list/[email protected]/ >
-------------------------------------------------------------------------- Revised: 20250507 You are receiving The Mifnet because you requested to join this list. The Mifnet is largely a labor of love, however the infrastructure isn't exactly cost-free. If you'd care to make a small contribution to the effort, please know that it would be greatly appreciated: https://wardell.us/url/mifbit All posts sent to the list should abide by these policies: 1) List members acknowledge that participation in Mifnet is a privilege--not a right. 2) Posts are always off the record, absent specific permission from the author. 3) The tone of discussions is collegial. 4) Posts are expected to be in reasonably good taste. 5) We discuss ideas and not personalities, and we don't speak ill of other Mifnet members. * The Mifnet WEB SITE is: https://www.mifnet.com/ * To UNSUBSCRIBE from this list at any time please visit: https://lists.mifnet.com/ OR: SEND THIS MESSAGE via email: [email protected]?subject=leave * Send Mifnet mailing list POSTS/SUBMISSIONS to: [email protected] * You may reach the person managing The Mifnet at: [email protected] * Please consider the DIGEST version of The Mifnet, which consolidates all list traffic into 1-3 messages daily. See instructions at: https://lists.mifnet.com/ * Manage your personal Mifnet SUBSCRIPTION at: https://lists.mifnet.com/ * For a list of all available Mifnet commands, SEND THIS MESSAGE via email: [email protected]?subject=help * View The Mifnet LIST POLICIES and PRIVACY POLICY at: https://mifnet.com/index.php/policies * View instructions for Mifnet DELIVERY PROBLEMS at: https://mifnet.com/index.php/delivery-problems * View The Mifnet LIST ARCHIVE at: https://lists.mifnet.com/hyperkitty/list/[email protected]/
