Build airline dynamic offers using existing infrastructure

1 March 2022

blog-header-build-airline-dynamic-offers

When discussing a pragmatic move toward a world of airline offers and orders, the concept of "dynamic offers" is pervasive—but can also seem elusive. How can an airline evolve its product offering and pricing to a more dynamic approach while keeping its existing revenue strategy performing? Knowing that a future 2030 vision is coming, what's the best place to start?

I chatted recently with Keith Wallis, Senior Director of Distribution and Payments at Air Canada and business sponsor of ATPCO's Offer Content council, to shed light on these questions.

Three prerequisites for airline dynamic offers

I asked Keith for his recommendations for any airline just beginning the journey to dynamic offer creation. He offered the following essential starting points:

  1. Have a solid product strategy: It's critical to invest in a well-planned product structure that will delight your customers at the right price point.
    • Will you offer brands?
    • One basic seat price and an ancillary catalog?
    • Perhaps a hybrid?
    According to Keith, "When we think about dynamic offers, we focus first and foremost on the customer experience, and creating loyalty, and growing share of the customer's travel spend wallet."

  2. Assemble needed customer data: Having robust and secure customer data enables you to define the best offer and tailor your price. It all starts and ends with the consumer! On this point, Keith shared the story that one of the reasons Air Canada brought their loyalty program back in-house was to gain access to contextual data that would help them better identify what customers seek in their Air Canada experience.

  3. Be ready to test quickly, fail fast: Don't overthink—test your strategy early on to know if you're on the right track. Pick a low-risk market segment and lean on industry infrastructure to help you roll it out in an agile way.

Air Canada in action: Dynamic offer creation using fare class and brands

At the start of their journey, Air Canada sought to offer multiple levels of pricing granularity within each of its fare brands while retaining the capability to offer last seat availability per brand. The level of granularity they needed was not possible using the traditional Reservation Booking Designator (RBD) and its limitation of 26 buckets. Technical constraints with the airline's in-house Passenger Service System (PSS) in use at the time made it impractical to consider Dual RBD as an alternative. It was clear that an alternative solution, also using existing infrastructure, was urgently required.

Air Canada achieved its goal by using fare classes, which will be complemented by the recent development by ATPCO and data subscribers of wildcarding within the fare class, to expand the number of available product choices exponentially. The fare basis code approach allowed a very flexible way to segment the airline's product bundles. Air Canada then offered all RBDs within each fare class, adding further granularity and cohesiveness with the airline’s Revenue Management strategy.

 

Learn how Air Canada advanced its dynamic offer strategy using fare basis codes.

How airlines can test dynamic offer creation using fare class and brand

Want to try out this approach? These steps describe how to create airline dynamic offers by listing all RBDs within a fare class and brand:

  1. Structure and plan your fare class taxonomy (for example, letter M in position 3 has the attributes minimum stay of 4 days, extra legroom, premium brand, and fully refundable)

  2. Consider this optional way of executing the fare class taxonomy:
    1. Tie cabins to the first letter of the fare class (prime RBD)
    2. Allocate attribute bundles to a planned taxonomy in characters 2-8 of the fare class
    3. Align the fare class to a brand in Branded Fares

  3. Incorporate "positional match" by allowing wildcard characters to expand the number of available permutations and price points

Please email me about your experiences trying dynamic offers or if you have any other feedback on this blog series.

If you're interested in getting involved in this industry conversation, please consider joining the ATPCO Design Team for Dynamic Offers, composed of airlines, subscribers, and channels dedicated to advancing the automation of airline offers to the benefit of consumers and the industry at large. I hope to see you there!

Offer, Order, Action

This blog article is part of a series. Please read all the articles!

author-img

By David Smith

David Smith, Head of Industry Standards, has 28 years of experience working in the airline industry in the travel distribution ecosystem. Within 10 years at a major European airline, and 18 years at ATPCO, he has experience in finance, business process re-engineering, program management, commercial negotiation, data distribution, and standards creation and management. He is also a board member of the US-based Society for Standards Professionals.