Airlines are continually looking for new ways to not only attract but also retain customers to stay competitive. From personalised airfare offers to creative fare bundles that provide related extras and services, airline revenue managers are developing innovative ways to target consumers.
With today’s hyper-connected and savvy travellers now having more channels than ever before to research a trip before making a purchase, it is critical to ensure that potential customers receive the right price at the right time in the right channel. When an online travel agency (OTA), metasearch engine (MSE) or other channel offers a seemingly lower airfare than an airline’s own website, the potential revenue loss may be far more than just the price difference. The resulting rate disparity can also impact an airline’s relationship with its customers, overall brand image and ultimately, the bottom line.
Focusing on airfare disparity
To reach the highest number of potential customers, most airlines distribute their airfares to numerous OTAs and MSEs, with the hope that the indirect channels will publish fares that are in line with their own. Unfortunately, this is not always the case. If a consumer finds a rate discrepancy between a specific airfare on the carrier’s own website to one found on an indirect channel, the airline’s brand and image may begin to weaken. At the time of purchase, the airline loses an opportunity to interact with the traveller directly and offer ancillary services that may be of value. Over time, a traveller may completely by-pass the carrier’s website if they believe they can find a better deal elsewhere. This loss of loyalty can have lasting consequences, including an inability to offer personalised offers and other reward program perks without a direct connection with the customer.
In addition to possible revenue loss from customers, indirect channels that offer disproportionate fares also can hurt an airline’s bottom line. Airlines set-up pricing agreements with OTAs based on the number of seats the indirect channel sells to customers. When an OTA offers a lower airfare than the carrier’s own published fare, the OTA may see an increase in its overall sales on behalf of a carrier, providing leverage to negotiate more advantageous pricing agreements in the future. The airline is also responsible for paying a booking fee to a global distribution system (GDS), which adds to its distribution costs. These costs can add up exponentially over time, threatening already narrow profit margins.
How to monitor all channels
In order to keep an eye on airfare disparity, Infare and our exclusive partner Air Cube have developed Channel Monitor, a turnkey solution to establish a level playing field across all airfare distribution channels. Channel Monitor utilises Infare’s comprehensive airfare data to allow you to focus on where, when and in what channels airfare disparity issues occur and enables airlines to address discrepancies with quantifiable evidence. By fully understanding how an airline’s fares stack up against the competition on their own websites, as well as on multiple OTAs and MSEs, airlines can make agile and dynamic pricing decisions to stay successful.
We invite you to download our recent white paper ‘Is airfare disparity costing you more than you think?’ to learn more about airfare discrepancy and its hidden costs. If you would like to see if your rates are level across all channels, please visit our website to schedule a demonstration of Channel Monitor.
Is airfare disparity costing you more than you think?Download White Paper