“AI-powered pricing is the single biggest opportunity for airlines right now.” - Future Travel Experience (FTE) EMEA insights

June 9, 2022


Future Travel Experience set up shop this week in Datalex’s hometown of Dublin, the first in-person event in Europe for the group in over two years. The topics for discussion at the event were very much forward focused on driving scalable innovation in the airline industry, a positive indication that the tide has turned for an industry that was disproportionately affected over the past 24 months.

Amongst the emerging strong trends highlighted at the event is the expectation that AI-powered pricing would be one of the next great opportunity for airlines in the post-COVID era. This prediction was outlined most prominently by Conor O’Sullivan, Datalex’s Chief Product Officer who was bullish about the potential that AI-powered pricing could deliver to airlines.

AI-powered pricing – the new frontier for airlines

O’Sullivan spoke about the overall opportunity in the area of Artificial Intelligence, which was seen in aviation during the pandemic around customer service. “Some airlines during the pandemic were forced to introduce AI chatbots to deal with the scale of customer queries. Now look where they are - they’ve never looked back.” He suggested a similar opportunity lies in AI-powered pricing, which, according to MIT and BCG, is the single most impactful AI initiative that a company can engage in. “It’s been proven to boost EBIDTA by 2 to 5 percentage points.” It’s clear that this is where airlines should be placing their bets next.

There is tangible demand for an AI-powered pricing product in the market, but airlines are not taking action quickly enough, according to O’Sullivan. “Many airlines know how lucrative AI-powered pricing is, because 92% of airlines we surveyed at the end of 2021 want to start this kind of initiative this year. But just 1 in 10 say they have started already.” This suggests a disconnect between the significant value placed on this area and the action taken. Of these airlines, they each had different motivations for introducing AI-powered pricing but all of them fell under the umbrella that characterises transformative airlines which include being retail first, digital first and acting in real-time. The airlines seeking out AI-powered pricing tools are aligning themselves more with their e-commerce leaders in other industries, rather than with other airlines.

Guaranteed revenue uplift and much more

Beyond the guaranteed revenue uplift (which Conor noted was averaging a revenue uplift of at least 2% in all scenarios) there are other key benefits of AI-powered pricing. In particular customer centricity and brand reputation are enhanced through AI with more customer centric pricing that leverages data in an intelligent way. The competitive opportunity is also key as airlines can eke out a competitive advantage by remaining flexible and cognisant of what is going on in the market at every moment, and pricing based on these changes.

AI-powered pricing – Thinking like you, not thinking for you

Conor shared details of how Datalex’s new AI-powered pricing plug-in, Datalex Pricing AI capitalises on all of these opportunities on behalf of the airline. To combat the hesitation that some airlines may feel about AI, he quelled their concerns by highlighting that this product thinks ‘like’ the airline, rather than thinking ‘for’ it. This handheld approach to pricing helps airlines in their understanding of the products and how it works in their best interest and mimics the in-house expertise they have today.

Conor outlined the process whereby Datalex Pricing AI automates what was once a manual, time-consuming and costly process of pricing data analysis – which is traditionally done by Revenue Management. “This can be the first step in your AI-powered pricing journey, by automating processes using the data that your revenue management teams have access to today.

“After this, further down the line decisions can be enhanced and models can be augmented by adding more granular price influencing factors. In the long term this will reduce costs on the data ingestion front and optimise resources by taking the heavy lifting and day to day tasks away from the team. All the while, revenue uplift is observed at every point.”

The overall feeling of the event was one of optimism, but also urgency. In order to get ahead and remain consistently competitive, airlines have to act now to preserve their position in this new era through new innovative products such as AI-powered pricing which put control back in airline’s hands.



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