Unit 2 Discussion Board Essay Example | Topics and Well Written Essays - 500 words - 1

Unit 2 Discussion Board - Essay Example The dynamic pricing strategy of Air Deccan is to use price as a function of demand and supply, wherein the earlier the booking is done the lesser is the price (About Us). To enable this pricing model made use of Information Technology to the full extent by setting up an Internet-based Centralized reservation system that centralized customers reservations through distribution channels through the Internet, call centers or travel agents. This enabled fares to be controlled by a group of computers using linear programming for revenue management. From the time a flight is opened for booking pricing is tracked and changed based on demand. The system uses a fare buckets for a given flight and fares change by the date, day of week and time of day (Sampler, 2006). The price of an air ticket booked early on Air Deccan compares favorably with an upper class rail ticket and is a boon to the more than 300 million middle class segment of society in India, which has happily accepted this means to affordable air travel. This advantage that Air Deccan offered with its dynamic pricing policy has caused a dramatic growth in the use of Air Deccan, whereby within three years since its starting, it has flown more than 5.8 million passengers and garnered a market share of 21.2 percent to become the second largest carrier in the country, pushing the national carrier Indian to third position (Air Deccan overtakes Indian in market share). Air Deccan faces two disadvantages as a result of its dynamic pricing strategy. It is facing threats to its market share from the full-service carriers in the country as well as new low-cost carriers. The full-service are lowering their airfares in the face of threat from Air Deccan and the other low-cost airlines, while the new entrant low-cost airlines are expected to use price as an entry strategy. There is no more flexibility available in pricing strategy of