Pricing & Revenue Management Blog

It's Time Airlines Consider a New Pricing Approach

Jun 14, 2017 1:12:31 PM
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Shortly after unveiling our pricing intelligence platform at the Aviation Festival in Miami last month, my colleague and Airnguru co-founder Javier Jimenez and I were interviewed by Airline Profits. And when it comes to airline profits, we quickly formed a consensus - there aren't enough of them.

In the course of the interview, the editor noted that the industry sometimes lags in technological and process innovation. As long-time airline professionals, Javier and I know that the industry needs to sharpen its innovation edge, certainly when it comes to the use of data for optimizing fare structures.

Increased competition, operational costs and inefficiencies together with aging technologies have all taken their toll on carriers, large and small. And these key factors are now converging in the pricing arena:

These real-life business challenges among the factors that we considered when we set out to build Airnguru’s pricing intelligence platform. Like our counterparts at other carriers, we were tired of wrestling with obsolete technology and inadequate or outdated market data.

We also hated losing revenue opportunities when we couldn't respond effectively to competitor pricing moves or other rapidly breaking market developments. We're talking real money here - Boston Consulting Group once estimated that a 1% improvement in price could create more than 11% operating profit.

Meantime, revenue pressures persist. In a widely reported 2017 outlook, the International Air Transport Association projected a 15% fall in industry profits, and first quarter 2017 financial results were sharply down for many full-service carriers. So this is no time to be inattentive to new sources of profitable revenue.

Using our SaaS solution, a carrier can streamline pricing processes, improve time to market, and discover revenue opportunities that are impossible to see with current technologies. As we explained to Airline Profits, winners among the airlines will be the carriers who are best at gathering, analyzing and using the mountains of data needed to bring pricing into the 21st century.

We share some of our thoughts in the interview that you'll find on the Airline Profits website. You will learn more about our thinking, and we'd like to learn more about yours. What challenges do you face when it comes to optimizing your fare structures?

Request a demo to learn more about our pricing solution for airlines.


Tags: Airline Industry, Airline Pricing, Artificial Intelligence
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