Each day, Infare collects over 2 billion unique airfares from airlines, online travel agencies and metasearch booking sites. This vast amount of competitive airfare data is vital in empowering real pricing intelligence throughout the global travel industry. With $908 billion predicted to be spent on air travel by consumers worldwide in 2020, it is more important than ever for airlines to have the most comprehensive airfare data at a moment’s notice. This timely data allows airlines to offer even more dynamic pricing and increased personalisation, raising customer satisfaction and overall profits.
Up-to-date can equal up in profits
At Infare, we are seeing a considerable hike in User Defined Searches (UDS), an exclusive feature of our pricing intelligence tool Pharos. These ad-hoc observation searches provide an in-depth and instant pricing visualisation snapshot for any set of data, providing real-time pricing intelligence. UDS have increased 48% in Q4 2019 compared to Q4 2018, highlighting how airlines are wanting to access to the most up-to-date and accurate data on the market. With this timely airfare data, airlines can adapt their pricing strategies quickly to stay nimble and competitive.
This increased appetite for the latest data can be seen most often by airlines based in the Americas and APAC region. From 2018 to 2019, carriers in these regions increased their UDS by over 37% each. Airlines based in Brazil and Chile were the largest users of UDS in the Americas, with South Asian carriers leading the way in APAC. Indeed, South Asian airlines increased the number of UDS more than 17x in just one year. This substantial uptick in UDS is a clear indicator that airlines are not just hungry for data, but fresh data.
So, what is driving this change and significant demand for timely pricing intelligence?
The rise of low-cost carriers
Over the last ten years, we have seen the rise in popularity and success of low-cost carriers (LCCs). They have historically had a much greater understanding of the importance of using the transactional data they have. By combining their customer data with competitive airfare data, LCCs can gain more significant insights into customer behaviour, meaning they can adapt pricing and services to meet customer expectations.
As an example, leading European low-cost carrier Ryanair pledges to consistently offer the lowest fares in the market, with an ambitious target of carrying 200 million passengers by 2024. To do this, Ryanair’s revenue management team continuously collects and analyses fare data from all competitors in the marketplace so they can effectively revise its pricing strategies.
As we’ve seen with Ryanair, LCCs are successful because they look at how they price their fares in a different way to traditional airlines. They are data-hungry and use the big data available to them to dynamically review their pricing, so the carrier can continuously stay ahead of the competition.
Changing consumer expectations
Today’s digital consumers expect more from their travel experience and expect the same experience they receive from other industries. Retailers and entertainment companies such as Netflix, Amazon and Spotify have had great success by offering personalised services to their customers, and there are lessons to be learnt here for airlines.
Ancillaries also play a big part in driving demand for personalisation. Ancillary revenue is growing year after year, from $28.5 billion in 2014 to $64.8 billion in 2019. There is a huge demand for airlines to drive revenue growth through the upselling of ancillary services, alongside the need to meet the consumer demand for personalisation.
So how can airlines prepare for the future?
Make sure the price is right
The airline industry has never been more competitive, with the rise of fuel prices, fragmentation of markets and the collapse of airlines such as Primera and Wow Air, it has never been more important for airlines to provide the right price.
Successful e-commerce businesses and retailers have embraced the availability of data in their decision-making process very early on. For example, Amazon put in place technology to monitor competitive price points for the products it was selling and would constantly adjust their pricing, sometimes by the minute.
The airline model is the same; airlines have an online product they want to sell, and they want to make it personalised to their customers. To do this, airlines must adopt the same data-hungry attitude LCCs and e-retailers have taken, keeping their pricing dynamic and using timely competitive airfare data to be confident they are offering the right price at the right time. According to Infare’s CCO Harald Eisenaecher, “Airlines which benchmark their fares more frequently ultimately leads to more accurate pricing. This frequency increase is a key learning from the e-retailing world.”
Data is now and will continue to be a central part of the airline industry. By using timely competitive airfare data and insights, airlines can enrich their own customer data to create targeted offers and provide the right airfare at the right time in the right channel for their customers.