Staying ahead with airline pricing strategies in the ultra-competitive travel industry

Staying ahead with airline pricing strategies in the ultra-competitive travel industry

5. July 2019

When we think of pricing intelligence, we tend to see Amazon as the trail blazers, with algorithms that reportedly change prices millions of times per day depending on demand and competition.

Uber, with its ride hailing service, is also well-known for its dynamic surge pricing. The company increases its basic rates when they know that a large sporting event is taking place, for example, or if there is particularly poor weather.

But what about airline pricing strategies?

At the end of June, Infare attended the IATA Aviation Data Symposium in Athens with our CEO Nils Gelbjerg-Hansen talking to the main stage with his keynote: “Monitoring and comparing retailing offers. With increasing fare families and merchandising, how can airlines get market insights?”

Airline Pricing Strategies Infare at IATA Aviation Data Symposium

Airlines are continually seeking new opportunities to generate extra revenues from secondary sources. This often means ‘unbundling’ their offer; selling first the seat and then adding extras such as baggage, VIP access, fast-track security, extra leg room, etc. The challenge for airlines is to maximise revenues through the right mix of unbundled airfares and bundled fare families in order to develop genuine additional, sustainable revenue streams.

In a tough aviation market of increasing fuel prices, decreasing airline yields and changing customer preferences, airlines are looking to grow ancillary revenues. To do that, specific airfare data and market insights are vital. Collecting and analysing the data from ancillary sales across the airline industry is necessary to enable meaningful competitor price observations and pricing intelligence.

Pricing Strategies Ancillary revenue IATA Aviation Data Symposium 2019

Baggage is by far the most commonly purchased ancillary item across the industry. An Amadeus study revealed that while most European full-service carriers offer checked-in luggage at every point of the passenger journey, almost all low-cost carriers offer checked-in baggage options separately from the base fare. Most low-cost carriers offer an initial low price for the booking but increase the price of the bag as departure date approaches.

At Infare, we understand that fares and fare families are not as simple as they look. We aim to create more meaningful and useful insights for our customers’ comparison models so that they can develop their own airline pricing strategies for baggage and other ancillaries to maximise profitability. Today, we are committed to providing best-in-class pricing intelligence solutions to the aviation industry. Tomorrow, we will continue to grow our investment to serve our customers for the future, and remain in the leader’s seat.

The new innovative approach Infare is exploring will provide airlines with deep insights on what they may be missing today in their offer compared to the competition, as well as insights about which competitors are directly eating into their revenue and where their profits are being most impacted. These data insights are vital in ensuring that airlines can effectively stay ahead in the competitive environment that is the airline industry.