Airlines are always looking to improve revenue performance, present the most competitive offers to the market, and meet the increasingly high expectations of travellers. This is especially important as air travel continues to steadily rebound and competition for vital market share intensifies. An airline’s pricing methodology, agility to price within and between fare classes, and ancillaries to create an optimised, personalised offer are foundational capabilities to thrive in today’s cut-throat market.
Australia re-opened borders earlier this year which was welcome news for the airline industry, and we started to see some sectors of travel rebounding. The Australian Competition and Consumer Commission’s Airline Competition in Australia report found that 4.5 million passengers flew on Australia’s domestic airlines in the second quarter of this year, which is 89 per cent of pre-COVID levels of travel. This is remarkable considering some more daunting earlier predictions.
However, the report also found that airlines remain under exceptional cost pressures as jet fuel prices surged to record levels over recent months, reaching an all-time high in May. This has had a direct impact on airline profitability and hence an impact on airfares.
With so many moving parts such as capacity constraints, unpredictable staff rostering and competitor activities, airlines need to look for every opportunity to deliver optimal revenue outcomes that drive profitable growth.
Enter data-driven revenue management and pricing strategies, which help airlines ensure accurate demand forecasting and precisely tuned airfares. Airlines need to be able to be concurrently proactive and reactive with broader market conditions and ever-present pricing complexities. This helps airlines deliver better commercial decisions and improved yields.
Oftentimes overlooked, airline group sales and corporate sales are two impactful areas of airlines that can use data-driven pricing and revenue strategies. Depending on the type of group, groups can be either acute price sensitive, or in the case of corporate sales, have pre-negotiated fare discounts and ancillaries.
The decision of where to travel or whether to travel at all can rest on the price quoted to the group customer. Moreover, an airline must ensure that the quoted price meets commercial requirements to be profitable. This balance is incredibly complex to achieve consistently. And that is precisely why sophisticated, data-driven AI systems like PROS Group Sales Optimiser are critical to optimising results, maximising revenue and minimising commercial guesswork.
Implementing a group pricing optimisation system that offers self-service capabilities will enable airlines to manage group bookings, pricing, contracts and policies in one location with speed and accuracy. This helps boost profitability for airlines and improve the booking experience for passengers.
Cathay Pacific is leveraging group sales optimisation to create a more seamless booking experience for group travel customers. Manual processes that used to take days or weeks, such as booking and pricing, now take minutes. As a result, the airline is well-positioned to dynamically price and manage groups as travel demand begins to rebound.
Similarly, Malaysia Airlines modernised its revenue management system with digital tools, sorting through tremendous amounts of data and simplifying everyday decision-making. As a result, the airline is more agile in adapting to market shifts and delivering the best offers at any given point in time, while minding relevant factors like competitor pricing.
Beyond traditional group sales, corporate sales are also an important part of airline revenue. As business travel resumes following the pandemic, investment in real-time pricing and quoting systems that allow airlines to provide self-service and high levels of customisation to their corporate customers will fuel loyalty and ensure they are receiving the best, revenue-optimal quotes for fares and ancillaries.
Looking ahead
As airlines continue to emerge from the pandemic and recapture passengers and loyalty, technologies that optimise commercial outcomes, utilising sophisticated AI techniques are not only recommended but indeed are an industry mandate. Airlines that don’t intertwine this technology with commercial strategies to drive business decisions are headed down a bumpy road.
.jpg){kind=tracking}
