The Evolution of Airline Pricing: From Fixed Fares to Real-Time Algorithms
Airline ticket pricing has come a long way since the early days of commercial aviation. What was once a straightforward process of setting fixed fares has evolved into a complex, data-driven system powered by advanced algorithms and artificial intelligence. Today, dynamic pricing in airlines is transforming how seats are sold, revenues are managed, and customers experience travel. The Era of Fixed Fares In the early days of air travel, airlines operated under strict government regulation. Ticket prices were largely fixed, with little variation across routes or time periods. Whether you booked a seat months in advance or a few days before departure, the fare remained nearly the same. This system was simple, but it failed to account for fluctuating demand and changing market conditions. As competition grew and deregulation began in the 1970s—particularly in the United States—airlines needed new strategies to remain profitable. This shift gave birth to the early foundations of w...