Dynamic Pricing And Price Commitment Mechanism For Aviation Considering Strategic Passengers Under Competitive Environment

Revenue management is a management concept and method based on information technology and price theory to scientifically control the products or services of enterprises to maximize profits.Dynamic pricing is an important revenue management technology that is widely used in the sale of perishable products,and airline ticket sales is the most widely used and most successful field.The statistics published by iResearch shows that the application and implementation of dynamic pricing,has increased the revenue of China’s aviation companies by at least 10%.With the rapid development of China’s aviation market,it has formed a pattern of fierce competition among major airlines.Therefore,when formulating prices,airlines must simultaneously predict the sales strategies of other competitors in the industry and their attitudes and reactions to their own company’s competitive strategy,and then consider the impact on the entire market.At the same time,with the rapid development of information technology under“Internet +”,passengers’ information acquisition capabilities have increased dramatically,and the implementation of dynamic pricing has prompted passengers to use information to strategically choose the timing of purchase,which has impacted the airline’s dynamic pricing system.So,considering market competition factors and passenger strategy purchase behavior in the price model,and proposing an effective response mechanism,it has certain significance for airline.This paper draws on the results of dynamic pricing and passenger strategy behavior in domestic and international air passenger revenue management,and other management theories and methods such as dynamic optimization,revenue management and game theory.According to the demand hypothesis from tight to loose,comparison after pricing,from the two perspectives of competition and passenger strategy behavior,study the airline pricing model,and propose the price commitment mechanism,and finally compare the dynamic pricing and price commitment mechanisms.The research in this paper mainly includes the following three parts: First,in the case of demand determination,it is assumed that there are two competing airlines in the market,and the passengers have strategic behaviors.By establishing the Hotelling model,the two-cycle game between airlines and passengers is depicted.This paperdiscusses the existence of non-cooperative game Nash equilibrium under dynamic pricing mechanism and price commitment mechanism,analyzes equilibrium pricing and returns under two pricing mechanisms,compares the effective range of them.Studies have shown that dynamic pricing is better when price discounts are small and when passengers are more strategic,or price commitments are better.Secondly,based on the first part,we relax the demand hypothesis,consider the uncertainty demand and passenger strategy behavior,and study the incomplete information non-cooperative game refinement Bayesian equilibrium between two competing airlines and passengers under the dynamic pricing mechanism.We analyze the changing path of the price strategy under the pricing mechanism and the impact of factors such as demand expectations and passenger strategy on the equilibrium results.The research shows that when the passengers’ purchase intention is moderate,the airline pricing strategy is the price increase route,or it’s the price reduction path.Third,based on the first two research contents,when the airline faces the demand uncertainty and passenger strategy behavior,the price commitment model is divided into the constant price commitment basic model and the discount commitment expansion model,which are respectively solved.Especially under the discount commitment mechanism,analyze the decision process of price discount,solve the price discount interpretation expression,and comprehensively compare the returns of the three mechanisms.Research shows that under the discount commitment mechanism,airlines will choose to commit to price reduction;constant price commitment is optimal when passengers have less willingness to purchase,dynamic pricing is optimal when passengers have a moderate willingness to purchase,and discount commitments is optimal when passengers are more willing to purchase.This paper studies the dynamic pricing and price commitment mechanism considering passenger strategic behavior in a competitive environment,which can provide a theoretical basis for airlines to choose pricing mechanism and make price strategy in different market situations.