Dynamic pricing is everywhere in the airline industry conversation these days. Vendors pitch it. Whitepapers reference it. It even features in The Economist. Everyone wants it. But what does it actually mean? More importantly, what does it take to do it right?

This article pulls directly from a talk by Radu Iliescu, Managing Director of Consulting at Branchspace, and distils real-world insights on where most airlines stand, where the real challenges lie, and how to move forward with confidence.

When dynamic pricing makes headlines for the wrong reasons

In August 2024, tens of thousands of Oasis fans queued online for reunion-tour tickets, advertised at £135 for standing spots. By the time many reached checkout, those tickets had jumped to £355. Ticketmaster’s dynamic pricing model was adjusting prices in real time while fans were still in the queue. The backlash was swift: social media erupted, MPs called for action, and the UK’s Competition and Markets Authority opened an investigation into whether consumers had been misled.

Why does this matter to airlines?  

Because dynamic pricing isn’t just for concert tickets and when poorly executed, it can alienate customers and damage trust. The same technology that makes pricing more responsive can just as easily undermine the customer experience if transparency is lacking.

What dynamic pricing actually means

Dynamic pricing, related to demand-based pricing, is a strategy whereby prices shift in response to real-time factors like demand, seat availability, competitor pricing, and market events. It’s been common in industries like hospitality and ride-hailing for years, but for airlines it is now seen as the “next frontier” in revenue management.

Done well, it can help airlines move beyond static fare ladders to a more agile, customer-responsive model. Done badly, it risks confusing customers, creating internal operational headaches, and even attracting regulatory attention.

The Three Pricing Frontiers in Airline Retail

Radu breaks down dynamic pricing into three levels. Each one builds on the last and reflects not just a technology shift, but a mindset and operational shift too.

1. Continuous Pricing: Most Common, Least Complex

Think of continuous pricing as dipping your toes in the water. You still work within a fare ladder, but instead of jumping from one price point to the next, you interpolate between them. That might mean offering a price of $133.55 when your filed fares are $120 and $140.

Many airlines already rely on this, by using a dual RBD (Reservation Booking Designator) structure, or by re-filing fares multiple times a day or, most commonly, by applying a real-time calculated discount to the filed fare, in all cases the price being determined based on an interpolation between consecutive fare ladder steps and the availability level within the lowest available RBD. It enables a greater price granularity than the discrete and rigid fare ladder, but you're still working within the same ruleset.

2. Dynamic Pricing: Real Optimisation Begins

This is where things get interesting. Dynamic pricing means calculating the optimal price in real time. It uses bid price curves and Willingness-to-Pay models to determine in real-time prices that reflect the current context of a flight search, market, and customer behaviour.

Similarly to continuous pricing, the process often involves issuing a ticket based on a filed fare and applying a discount to reach the optimal price point. For example, if the optimal price is determined to be $103.26 but your nearest equal or greater filed fare is $120, you issue the ticket based on the $120 fare and discount it by $16.74. But the algorithm used to determine the optimal price is much more sophisticated than the one used for continuous pricing.

Some large airlines and airline groups have been using such approaches for years. But it's not just about the science. The real challenge is implementing it within a legacy ecosystem.

Another example is Delta Air Lines pushing into AI-driven dynamic pricing, currently affecting about 3% of domestic tickets, with plans to scale to 20% by the end of 2025. The pricing engine uses context such as flight details and browsing behaviour to set what a passenger might be willing to pay. Despite its potential, the initiative has attracted regulatory scrutiny over fairness and transparency  

3. Atomic Pricing and Dynamic Bundling: The True Retail Leap

The third level is where retail transformation becomes tangible. Atomic pricing means pricing every component of an offer individually: right to fly, cabin and hold baggage, seat selection, flexibility options (right to change & right to cancel), in-flight service etc. and then combining all of those into a final bundle that is priced as a function of the granular prices of its atomic components with an additional (optional) bundle price optimisation on top.

This approach only really becomes feasible in an Offer/Order world. Trying to implement atomic pricing within a legacy PSS is not impossible, but the complexity would likely outweigh the reward.

Still, the potential is huge. It allows airlines to build modular, responsive offers and match pricing to actual demand signals at a granular level.

On the ancillary side, JetBlue has introduced dynamic pricing for baggage: during high-demand seasons, first checked-bag fees increase by about US $5 and second bag fares by US $10, varying further by route and booking timing.

Related: 5 considerations when moving to Modern Airline Retailing

The Real Roadblock? Legacy System Integration

One of the biggest misconceptions about dynamic pricing is that the hardest part is building the pricing model. In reality, a major challenge is also making it work across the airline’s legacy PSS and distribution ecosystem.

When we worked with Lufthansa Group on implementing dynamic pricing over NDC, the majority of the effort was spent on ensuring the pricing flowed correctly through Amadeus Altéa, NDC APIs and Revenue Accounting system, and retained downstream compatibility with legacy servicing systems (e.g. Amadeus ATC).

Many airlines underestimate the level of technical debt and architectural rigidity of their current setup. Pricing transformations often stall not because the algorithm fails, but because the downstream systems can’t handle the dynamic price properly.

Ancillary Pricing: The Overlooked Opportunity

Dynamic pricing is often discussed in relation to base fares, but optimising ancillaries pricing may be a significant revenue unlock as well.

Take seats, for example. They’re scarce, high-value (especially on long-haul), currently priced in static tiers and not subjected to regulatory constraints (like baggage tends to be). Demand-based pricing for seats, especially front-of-cabin or extra legroom options, offers strong margin potential with fewer ecosystem constraints.

Flexibility conditions, lounge access and cabin baggage are further opportunities. With limited overhead bin space, demand-driven pricing can help balance load while generating revenue (although this may be limited in some regions by local regulations).

Yet most revenue management systems aren’t built for this. A modern retail mindset means treating these components as products with their own demand curves, not just price tags.

What Should Airlines Do Next

Here are a few practical ways to build momentum:

1. Start with continuous pricing, but don’t stop there.

Design your architecture to scale toward true dynamic pricing and eventually atomic pricing. Build incrementally.

2. Be smart about data usage.

Most airlines avoid using individual / personal customer data for pricing due to discrimination concerns. Instead, rely on contextual signals: itinerary, pax composition, timings (time before departure, length of stay, departure and return days of the week etc.), competitor pricing, market trends, weather, events and any other non-individual customer-related signals that are likely to influence the demand elasticity of your customers.

3. Own your models, but test others too.

Some of our clients use both internally developed and vendor-provided models for Willingness-to-Pay (WTP), then A/B test them. Having both options increases your level of expertise on price optimisation while giving you control and flexibility, and potentially a greater degree of price optimisation.

4. Manage expectations on uplift.

WTP-based models are still maturing. The oft-quoted 5% uplift is possible, but not guaranteed. Focus on experimentation and tracking performance, not over-promising.

5. Think incremental transition stages, not gigantic leaps.

There’s a temptation to treat dynamic pricing as a single leap. But the reality is more layered:  

• You start with continuous pricing;

• You build dynamicity capabilities;

• You prepare your architecture and governance to support atomic product management and pricing;

• All while adapting your distribution channels and wider IT ecosystem by aligning pricing with UX, merchandising, servicing and other downstream systems.

So, going back to our original question, what does it take to get the rollout and adoption of dynamic pricing right? There is no single right answer for everyone, it depends on where an airline is at in their current Offer transformation process, the specificities of their existing IT ecosystem etc.

What is crucial is knowing what you want to achieve (i.e. how much extra revenue you can aim for), defining your approach and assessing the investment requirements in advance. Setting the right transition strategy and defining your business case are both essential pre-conditions for a successful outcome.

The end goal? Higher yields and greater attach rates for ancillaries, yes. But also more relevant, personalised offers that reflect what travellers actually want, when they want it.

And that’s not just a pricing strategy. It’s modern airline retailing.

Talk to us and start your Modern Airline Retailing journey today

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The average airline web portals is not broken. It loads, it sells tickets. It technically does what it's supposed to do.

And yet, the experience feels tiring.

You notice it when you try to do something simple. Change a seat. Find your gate. Understand what happens if a flight is delayed. Suddenly you are scanning long pages, decoding airline terminology, clicking back and forth just to stay oriented.

The problem is not with the features, It is effort effort required in getting from A to B.

Airline portals still expect travellers to think like systems. To understand menus, categories, fare families, ancillaries, rules. But travellers arrive with something much simpler. Intent.

They want to get something done and get on with their journey.

This article posits that airline web portals should stop behaving like navigation systems and start acting as intent-aware decision environments. When UX is designed to reduce effort, adapt to context, and quietly support travellers at each stage of the journey, portals become calmer to use, easier to trust, and far more effective for airlines.

The basics still matter more than airlines think

Before talking about AI or personalisation, it is worth being honest about the fundamentals.

You can see that accessibility standards aren’t yet being applied and portals aren’t optimised for mobile, which results in performance drops. Navigation feels heavier than it needs to be. Search often works, but only if you already know what to ask and how the airline expects you to ask it.

These are not exciting topics, but they shape everything that comes after. If a portal is slow, confusing, or inaccessible, no amount of intelligence layered on top will fix the experience.

At Branchspace, we see this repeatedly. Airlines want to move faster, personalise more, experiment. But the UX foundation is not always ready to support that ambition.

Where portals lose traveller trust

The biggest UX issues are rarely dramatic, they are subtle and cumulative:

• A vague error message that offers no next step

• A long paragraph that hides the one thing the traveller needs to know

• Three different words for the same concept depending on where you are in the journey

• A mobile page that technically works but feels endless

In isolation these are small instances, but they compound to create friction for a user. And friction erodes confidence.

Travellers begin to hesitate, scan more carefully, and spend extra effort just trying to stay oriented. They stop trusting that the portal will help them when things go wrong. Good UX goes beyond delight, it is about reassurance.

Decision-making is the real job of UX

Every airline portal is a decision-making environment:

1. Choose a flight

2. Choose a fare

3. Choose a seat

4. Decide whether to rebook or wait

The role of UX is not to present all options equally. It is to reduce the mental work required to choose well.

That is where simple principles matter more than flashy ideas: clear visual hierarchy, familiar patterns, plain language, and progressive disclosure.

When these are done properly, travellers stop analysing the interface and start moving confidently through it.

This is also where intent-led thinking becomes powerful. When portals are designed around tasks rather than pages, complexity begins to fall away naturally.

What changes when you design for intent

When you stop designing for navigation and start designing for intent, the portal behaves differently:

• Shift the focus to intent and the portal begins to respond in new ways

• Search leads the experience rather than sitting in the background

• Logged-in travellers with an upcoming trip see what they can do next, instead of being asked to explore

This is the direction we have been taking with platforms like Triplake by allowing the portal to respond to context, trip stage, loyalty status and behaviour.

Where AI actually helps and where it should stay quiet

AI has a role in airline UX, but it works best when it stays in the background rather than taking centre stage. The strongest AI-driven experiences are often the ones you barely notice, because the interface feels simpler and the path forward feels clearer.

That might mean routing a traveller straight to the right outcome based on a natural language query, or surfacing the most relevant rebooking option when a disruption occurs. In other moments, it is about removing repetition altogether, using known preferences to spare travellers from making the same choices again and again.

At its best, AI offers clarity, supports decisions without trying to make them on the traveller’s behalf. People still want to feel in control of their journey, they just do not want to work so hard to get there.

The portal is becoming a living interface

The most interesting shift we are seeing has very little to do with technology and everything to do with behaviour. Airline portals are gradually moving away from being static websites and towards adaptive interfaces that respond to where a traveller is in their journey.

Before the trip, the portal helps you prepare. On the day of travel, it shifts into a supportive role, surfacing the information that matters most in the moment. Afterwards, it follows up, closing the loop rather than simply ending the experience.

Making this work demands modular design systems, flexible platforms, and teams that think beyond individual pages and flows. It is not an easy change, but it is both achievable and increasingly necessary.

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