Emerging research on airline ancillaries: a review of offer management and dynamic pricing literature

Changes in airline distribution, such as New Distribution Capability, are enabling better retailing of airline products. In the future, it will be common to generate an optimal, dynamically priced set of personalized offers (flight with ancillaries) in real-time for customer requests. This paper systematically reviews the recent and growing literature on airline offer management and dynamic pricing of ancillaries. Themes identified include customer segmentation, offer relevance, willingness-to-pay, competitive positioning, and performance monitoring. Empirical literature reveals machine learning, discrete choice modeling, and optimization as important methodologies. Additional literature on willingness-to-pay estimation challenges and price experimentation are connected and discussed.