International Journal of Scientific Research and Engineering Development

This study examines the practice of price discrimination in the airline and hospitality industries through a microeconomic perspective, focusing on how pricing strategies are designed to maximize revenue and manage demand. Both industries operate in environments characterized by high fixed costs, limited capacity, and perishable inventory, making effective pricing essential for profitability. Airlines adjust ticket prices based on factors such as booking time, demand fluctuations, and customer type, while hotels use similar strategies, varying rates according to seasonality, location, and consumer behavior. These methods often involve first-degree, second-degree, and third-degree price discrimination, allowing firms to capture consumer surplus and improve capacity utilization. The research explores the role of technology, including data analytics and artificial intelligence, in implementing dynamic pricing models that respond to real-time changes in market conditions. By segmenting customers based on their willingness to pay, airlines and hotels are able to offer personalized pricing, discounts, and loyalty incentives, which in turn enhance profitability and competitive positioning. However, this approach also introduces ethical and regulatory challenges, as pricing disparities can create perceptions of unfairness and raise questions about transparency. Through an analysis of economic theory, case studies, and industry practices, this paper highlights the balance businesses must strike between efficiency and fairness in pricing strategies. The findings emphasize that price discrimination, when applied strategically, can lead to better resource allocation and improved operational sustainability, but also requires careful consideration of consumer trust and market regulations. Overall, the study demonstrates that these industries provide a clear illustration of how microeconomic principles can be applied in real-world scenarios to address complex business challenges.

Prajwal Adsule, Siddhant Vijay Gawali,"The Price Discrimination in Airline and Hospitality Industries: A Micro Economic Analysis" International Journal of Scientific Research and Engineering Development, V9(3): Page(1332-1337) May-June 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.