Dynamic airline offer creation - is the future here?

August 29, 2017

With the advent of the trend towards digital retailing in the airline industry, and the desire for airlines to become the sole source of the offer, there has been a lot of discussion related to dynamic pricing. Sponsored by Datalex, Travel in Motion has written a white paper ‘Dynamic airline offer creation – is the future here?’, which aims to demystify some of the concepts and definitions of dynamic pricing and take it a step further - to dynamic offer creation.

It is a good time to look into the crystal ball. Technologies such as artificial intelligence, cognitive intelligence and machine learning - all somewhat related - are on the rise. Concepts such as segmentation, personalisation and contextualisation in airline offer creation are taking shape, and in some cases, are quite advanced. With the increasingly competitive market and uses of new tools and channels to make offers and sales, airlines need to rethink their understand of the competition and get a better view on the customer’s needs and desires.

The airline business model is changing, and the airfare itself is being taken apart in new ways. The unbundling of airline products does not just mean that seat selection, meals and baggage are upsells. In some cases, airlines are taking apart fare components even further. Is refundability a product? What about flexibility? Fare families today would certainly indicate that this is the case. Put simply, the logic being applied is the “need and desire” philosophy. Airlines are offering to fulfil a need at a base price. At the same time, they are identifying possible desires, such as the ability to refund a ticket, to select a specific seat, or to be picked up by a chauffeur. But who receives which product offerings?

In the full white paper, we go beyond the topic of dynamically determining airfares and flight prices, and provide clarity on the definition of dynamic pricing. While dynamic pricing is practiced today, the determined price is not fully dynamic or continuous, thus not allowing the airline to sell at an optimal price. Various industry experts provide their thoughts and opinions on pricing, offer creation and artificial intelligence which would allow airlines to optimise revenues even further.

We also discuss the distinction between segmentation, contextualisation and personalisation, and what are the new revenue management parameters in offer creation. Finally, looking beyond the horizon, how will cognitive computing, artificial intelligence and machine learning help us to learn what the market wants?

 

To download the Travel in Motion white paper “Dynamic airline offer creation – is the future here?”  -Click here