Airline Pricing: The Secret Sauce Behind Dynamic Airfares

Ever wondered why airfares fluctuate so wildly? This report dives into the complex system behind airline pricing: fare buckets and inventory management. Airlines don't just sell seats; they manage a dynamic inventory of fares, divided into booking classes (fare buckets) with different prices and rules. We explore the hierarchy of booking classes, how airlines update seat availability across reservation systems, the role of revenue management algorithms, and the evolution from rigid fare classes to modern dynamic pricing. Using industry documentation and technical standards, we reveal how airlines control seat availability and pricing, explaining why the same flight can have wildly different prices. This deep-dive unveils the technology and algorithms that power dynamic airfare pricing.