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Friday, May 21, 2021

Adjusting Fare Algorithms

 This came up in discussion this week .. the algorithms are classic approaches.  But the algorithms are adaptive, so I would expect them to be continually adjusted. And if they are maintaining them, as I always suggest .... 

COVID-19 Wrecked the Algorithms That Set Airfares, but They Won't Stay Dumb

The Wall Street Journal, Jon Sindreau, May 17, 2021

The COVID-19 pandemic crippled the reliability of algorithms used to set air fares based on historical data and has accelerated a hybrid model that combines historical and live data. Before the pandemic, airlines used the algorithms to predict how strong ticket demand would be on a particular day and time, or exactly when people will fly to visit relatives before a holiday. Corporate travel constitutes a large share of airline profits, with business fliers avoiding Tuesdays and Wednesdays, favoring short trips over week-long ones, and booking late. The pandemic undermined historical demand patterns while cancellations undercut live data, causing the algorithms to post absurd prices. Overall, the pandemic has stress-tested useful advancements to the algorithms, like assigning greater weight to recent booking numbers, and applying online searches to forecast when and where demand will manifest.  ... '

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