Fares & pricing Travel technology glossary

Continuous pricingContinuous (class-free) airline pricing

Also called continuous price pointsclass-free pricingfully dynamic pricingmin/max pricing

Definition

Continuous pricing is an airline pricing method in which the price of a flight can be any value within a range, calculated at the time of the request, instead of one of a fixed set of fares filed against booking classes. It is the most advanced form of dynamic pricing and depends on airline-generated offers.

What Continuous pricing means

Traditional airline pricing is discrete. The airline files a ladder of fares, each tied to a booking class letter, and revenue management opens or closes those classes. IATA notes that this limits control to a maximum of 26 booking classes. If the ideal price sits between two filed fares, the airline has to pick one of them.

Continuous pricing removes the ladder. The airline's offer system computes a price for each request from demand, capacity and context, so prices are no longer limited to filed steps. IATA's Dynamic Offers material describes it as an evolution of dynamic pricing that allows indefinite price points.

The difference from dynamic pricing needs to be precise. Dynamic pricing is the wider family: any method that sets or adjusts the price at shopping time. ATPCO-commissioned research separates three levels: choosing from a small set of predefined price points, adjusting a filed price up or down, and continuous pricing, where prices are freely selected from a continuous range. All continuous pricing is dynamic, but most dynamic pricing in use today is not continuous.

Because nothing is filed in advance, continuous pricing does not fit the classic GDS model, where fares from ATPCO are combined with availability. ATPCO's own simplified model lists unfiled fares, an airline pricing engine and an offer and order management system as requirements. In practice that points to NDC and direct channels. ATPCO's glossary also describes min/max pricing, where an airline distributes a price range instead of single prices, as one continuous pricing approach.

How Continuous pricing works

Continuous pricing replaces a lookup of filed fares with a calculation at the moment of shopping.

  1. Request reaches the airlineA shopping request from an NDC API, the airline website or an app is sent to the airline's offer system in real time.
  2. Demand and capacity assessedThe system reads forecasts, remaining seats, booking pace and market context for the requested flights.
  3. Price computedA pricing engine calculates a value from a continuous range instead of choosing a filed fare for an open booking class.
  4. Offer returnedThe computed price is returned inside an offer with its conditions and a validity time limit.
  5. Order and accountingIf accepted, the offer becomes an order, and downstream ticketing, accounting and audit must accept a price that matches no filed fare.

Continuous pricing in practice

Illustrative comparison. An airline files economy fares of USD 250 (class Q), USD 290 (class M) and USD 340 (class B). Its forecast suggests the best price for a Thursday flight is about USD 272.

  • Discrete pricing: it must sell at USD 250 or USD 290 by keeping class Q open or closing it.
  • Dynamic price adjustment: it can move the filed USD 250 fare up in a fixed step, for example to USD 270.
  • Continuous pricing: it can quote USD 272 directly, or USD 268.40 a few hours later as demand changes.

All figures are invented for illustration.

Who uses it

AirlinesPricing and revenue teams use continuous pricing to place prices closer to the demand they forecast for each flight and moment.
Travel agenciesAgencies connected to airline NDC APIs receive continuously priced offers and must book them inside their validity window.
Corporate travel buyersBuyers need negotiated deals expressed as a discount or rule on a computed price, since there may be no filed fare to discount.
Technology vendorsOffer management and pricing engine providers build the systems that compute and return continuous prices.

Advantages and limitations

Advantages

  • Prices can match forecast demand more finely than a ladder of 26 or fewer filed steps.
  • Airlines can respond to changes in demand without refiling fares.
  • More price points give travellers more chances to find an acceptable price on a given flight.

Limitations

  • It needs real-time airline offer systems and does not work with classic filed-fare GDS pricing.
  • Quotes change quickly and expire, which makes comparing, holding and re-quoting harder for agencies.
  • Ticketing, audit, refunds and corporate discounts built around filed fares must be redesigned.

Frequently asked questions about Continuous pricing

Is continuous pricing the same as dynamic pricing?

No. Dynamic pricing covers any method that sets or adjusts price at shopping time, including small adjustments to filed fares. Continuous pricing is the most advanced type, where the price can take any value in a range rather than a fixed step. Every continuously priced offer is dynamic, but not the other way round.

Why are airlines limited to 26 booking classes?

Booking classes are identified by a single letter of the alphabet, which gives at most 26 codes. Under filed-fare pricing, each price step needs a class to control it. IATA cites this limit as one reason the industry is developing dynamic and continuous pricing.

Can continuous pricing be sold through a GDS?

Not in the classic way, because GDS pricing combines filed fares with seat availability, and continuous prices are not filed. They can reach agents through NDC connections, including NDC content that some GDSs now distribute, where the airline returns the computed offer.

What is min/max pricing?

ATPCO describes min/max pricing as a continuous pricing approach in which the airline distributes a range, a minimum and maximum, instead of individual prices. The final price within that range is set closer to the moment of sale.

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Sources and further reading

  1. IATA — Dynamic Offers: dynamic pricing, continuous pricing and dynamic bundling (May 2021)
  2. PODS Research for ATPCO (Belobaba, Brunger, Wittman) — Advances in Airline Pricing, Revenue Management, and Distribution (October 2017)
  3. ATPCO — Simplified model for dynamic pricing
  4. ATPCO — Glossary (M): min/max pricing
  5. Journal of Revenue and Pricing Management (Touraine, IATA) — The industry transformation to dynamic offering (2021)