Are you ready for what’s next in airline pricing? Probably not…
Advances in data science, technology, and in customer expectations now allow us to explore new methods of personalization and revenue generation. But despite all the buzz in the industry about the potential of IATA’s New Distribution Capability (NDC) and developments in dynamic pricing, most airlines are unprepared to take advantage of these new developments.
It’s not about money or technical sophistication.
In the past, a small airline could not afford a complex revenue management system. Advances in the fundamental theories of revenue management have made it possible, even with simple leg-segment inventory control, to create competitive price points in the market and influence customer demand.
It’s not about the lack of knowledge of the customer.
At ATPCO Consulting, we work with a broad range of airlines, from carriers that have over 1000 aircraft to those with fewer than five. Every single one of them knows, particularly in pricing and revenue management, key aspects of their customer base that influence demand. Whether captured in a complex customer information database, or simply written on a sticky note stuck on a computer screen, pricing analysts know who buys tickets, when they buy them, and how much they are willing to pay.
The fundamental problem for airlines is a siloed and inefficient organizational structure that inhibits the adoption of new technologies.
To implement a dynamic pricing program, efforts need to be coordinated between airline pricing, revenue management, distribution, ecommerce, sales, and revenue accounting. What we find is that one group of staff often doesn’t necessarily understand what other groups within the airline do, and that leadership isn’t available to push these initiatives forward. These situations mean the implementation timeline for something as simple as setting up NDC messaging of baggage allowance to one travel agency takes far longer than it should.
It starts with a language and definitions disconnect. If you work at an airline in revenue management, you likely don’t know what Category 10 Combinations are and how they impact your work. A competitive pricing analyst doesn’t understand what a Participating Carrier Agreement is, or how it impacts their work. A revenue accountant may not understand Bid Price Exchange, even though it is critical for how pricing points will change. This makes collaboration difficult.
When a new initiative comes along, especially a large one like NDC implementation, many airlines are not organizationally ready to change. Today, airlines are falling behind the industries that are becoming the leaders in innovating pricing strategies, such as ridesharing and online retailing.
Smart airlines know they need to keep up. What can an airline do to overcome legacy organizational barriers and grow revenue?
At ATPCO, we realize that cross-department collaboration is essential for airlines to take advantage of new technology.
ATPCO’s Consulting Team evaluates airline business problems from multiple perspectives, so that the solutions we help you build can take root throughout your organization—in pricing, revenue management, and distribution.
We not only know systems and tech, we know people. We can help you optimize processes and communication to build the collaboration your team needs to prosper in the future.
Are you ready? ATPCO is here to help make sure you are ready for what’s next!
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