What are the pricing models used by airlines for price discrimination?

Airlines use several pricing models for price discrimination to maximize their revenue and cater to different customer segments. The main pricing models used by airlines include:

1. Basic Economy Fare: This is the lowest-priced fare option offered by airlines, targeting price-sensitive customers. It typically includes only the seat and limited or no additional services, such as baggage allowance or seat selection.

2. Economy Fare: This is the standard fare option offered by airlines, providing a balance between price and services. It includes the seat, baggage allowance, and some basic services like in-flight meals and entertainment.

3. Premium Economy Fare: This fare option offers additional comfort and services compared to the economy fare. It includes extra legroom, enhanced meal options, priority boarding, and sometimes access to airport lounges.

4. Business Class Fare: This fare option targets business travelers and offers a higher level of comfort and services. It includes spacious seating, priority check-in and boarding, enhanced meal options, access to airport lounges, and sometimes lie-flat beds for long-haul flights.

5. First Class Fare: This is the highest-priced fare option, providing the most luxurious and exclusive experience. It includes the finest amenities, personalized service, spacious seating, gourmet meals, private suites with lie-flat beds, and access to exclusive airport lounges.

Additionally, airlines also use dynamic pricing strategies, where fares fluctuate based on factors such as demand, time of booking, and seat availability. This allows airlines to charge higher prices during peak travel periods or for last-minute bookings, while offering lower prices during off-peak periods to attract more customers.

Overall, these pricing models and strategies enable airlines to segment their customers based on their willingness to pay and offer different levels of service and amenities, maximizing their revenue and ensuring a diverse range of options for travelers.