Correspondence: Faker Zouaoui, Sabre Holdings, 3150 Sabre Drive, Southlake, Texas 76092, USA

¹is a Senior Director of Marketing at Sabre Holdings. He leads the Marketing Analytics team, where he is responsible for identifying high impact opportunities to improve Sabre's cross-channel air shopping and travel agency revenue management capabilities. Dr. Zouaoui holds a PhD degree in Operations Research from North Carolina State University.

²is a Senior Director and Scoring Officer at Capital One Financial Corporation. At Capital One, he is responsible for oversight and development of analytical models across the enterprise. This research was conducted when he was a Senior Principal in the Research Group at Sabre Holdings.

Abstract

Several Internet travel providers have introduced a business model that revolves around selling an opaque product. This paper gives an overview of this practice in the airline industry to supplement existing distribution channels and to reach previously under-served, price-sensitive customers. It also provides an approach to design a decision-support system for dynamically pricing opaque products to fit prevailing market conditions by studying customer purchase behaviour and exploiting the interactive nature of the Internet. An application of this dynamic pricing approach provides about 48 per cent additional revenue benefit from selling opaque products compared to the traditional static pricing approach.