What’s behind the success of Low-Cost Airlines Pricing Strategies?
For many years Low-Cost Airlines have been a disrupting force in the airline industry with their direct distribution model and dynamic pricing strategies. Even with rising fuel costs and a challenging global economy, Low-Cost Carriers (LCCs) have continued to outperform traditional full-service carriers.
At the Aviation Event in Salzburg on 6 June, Infare’s CCO Harald Eisenaecher explained what airlines can learn from Low-Cost Airlines pricing strategies.
Put simply, LCCs have been successful by looking at pricing intelligence in a very different way from traditional airlines. From the start they have looked at pricing just like other eCommerce retailers, businesses not held back by the pricing and technological conventions of the airline industry.
Data has been key. By using big data information and dynamically reviewing pricing, LCCs have been able to consistently stay ahead of competition in the market.
At Infare, we can see that the top 12 LCCs in the world are already today more data hungry than network carriers – their growth rate in terms of data consumption of competitive airfare data is three times higher than those of network carriers. In EMEA, LCCs have doubled the amount of competitive airfare data that they consume compared to other airlines. On average, they also purchased seven times more airfare data via ‘Live Snapshots’ and ‘User Defined Searches (UDS)’ daily compared to traditional carriers. This is clear proof that LCCs use airfare data more tactically as well as to develop strategic insights into their long-term pricing intelligence strategies.
It is interesting to see that, in 2015, easyJet took the step of appointing its first Head of Data Science to oversee collection and analysis of data on engineering, operations, market trends and customer preferences. The use of artificial intelligence, data science and machine learning has become a vital component in the successful running of an airline, particularly for pricing intelligence but not only.
If data is already critical today, it will become exponentially more so in the future. Many airlines are now applying surcharges to GDS bookings (e.g. Lufthansa and British Airways) as they seek to encourage more direct bookings – a trend initiated by the LCCs with their direct distribution model. This move towards increased direct bookings gives airlines the freedom to generate increased amounts of higher quality data and as a result, create deeper insights about customers and their needs.
Intense airline competition makes it even more critical for airlines to closely examine their airfares and assess where opportunities lie. Infare pricing intelligence solutions play a major role in helping airlines stay competitive. While Low-Cost Airlines consume more and more airfare data, we at Infare are prepared for the exciting future ahead; always ready to support all types and sizes of airlines.
Let’s talk about how we can work with your airline to unlock the power of airfare data to implement smart pricing intelligence strategies.