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Cebu Pacific Dynamic Pricing

Dynamic Pricing

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Honey amayao
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82 views4 pages

Cebu Pacific Dynamic Pricing

Dynamic Pricing

Uploaded by

Honey amayao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Cebu Pacific, a leading low-cost carrier in the Philippines, has been a

pioneer in implementing dynamic pricing to stay competitive and manage


demand fluctuations in the airline industry. As a budget airline, Cebu
Pacific’s success lies in its ability to offer affordable fares while maintaining
profitability. Dynamic pricing allows the airline to adjust prices in real time
based on several factors such as demand, booking time, route popularity,
seat availability, and competitor pricing.

Cebu Pacific uses dynamic pricing to cater to different types of travelers,


from price-sensitive customers who book early to business travelers who
may book closer to the departure date and are willing to pay a premium for
convenience.
Cebu Pacific often implements lower prices during seat sales and
promotional events, encouraging customers to book early. However, as the
departure date nears, prices tend to increase, especially if there are fewer
seats left. This time-based pricing encourages customers to plan their trips
in advance and allows the airline to fill seats ahead of time, optimizing
revenue.

The airline adjusts ticket prices based on demand fluctuations. For example,
during peak travel periods such as holidays, long weekends, and festival
seasons, Cebu Pacific raises its prices to match the higher demand.
Conversely, during off-peak times, the airline offers lower prices to
stimulate demand and avoid flying with empty seats.
In addition, Cebu Pacific tailors its prices based on the popularity and
competition of specific routes. Heavily trafficked routes like Manila to Cebu
or international destinations like Hong Kong may have higher base prices
due to consistent demand. However, on less popular or emerging routes,
the airline might offer lower fares to attract more passengers and increase
route profitability.

Also, they closely monitors competitor pricing. In cases where a rival airline
offers lower fares, Cebu Pacific adjusts its prices accordingly, ensuring they
remain competitive in the market. This is especially important in the low-
cost airline segment, where customers are highly sensitive to price changes.
Lastly, Cebu Pacific uses inventory management techniques to adjust
pricing based on the number of available seats. As fewer seats remain
available on a flight, the price increases. Early buyers benefit from the
lowest fares, while last-minute travelers often pay the highest rates due to
the limited availability of seats.

Application Questions:

1. How does Cebu Pacific use time-based dynamic pricing to benefit both
the airline and its customers?
2. In what ways does demand influence Cebu Pacific’s pricing strategy
during peak and off-peak travel periods?
3. Why is competitor monitoring important for Cebu Pacific’s dynamic
pricing, and how does it affect their pricing decisions?

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