01 Jul Continuous Pricing, Dynamic Offer Generation and the Transition to True Customer Centric Airline Retail
Download the new Datalex White Paper for exclusive insights here.
The COVID-19 pandemic has caused havoc for traditional revenue management models. The typical patterns of peak and low seasons, estimated booking windows, look to book ratios as well as the expected patterns of boom-and-bust economies no longer apply. Dealing with this major disruption in revenue management requires innovative thinking, a great deal of flexibility and importantly, more agile and intelligence driven pricing and offers than ever before.
Dynamic pricing is a hot topic in the airline industry, as airlines are laser focused on driving incremental revenue and a deeper wallet share – maximising per seat profit all while delivering a superior offer that meets customer needs.
While Dynamic Pricing is by no means a new concept, the techniques, algorithms, artificial intelligence, and technologies behind it are continuing to evolve at a rapid pace. Enabling airlines to invest in this at their own pace and control their journey towards Continuous Pricing and full Dynamic Offer Creation is key as airlines explore new retailing opportunities.
Although the terms can be used interchangeably, it is important to note that Dynamic Pricing and Continuous Pricing are not the same. Dynamic Pricing means prices that change over the booking horizon for the same flight departure and product. Continuous Pricing means prices are quoted from a very large (infinite) number of possible levels. And the holy grail for airlines is to achieve full Dynamic Offer construction – creating and pricing bundles of flights and ancillaries that correlate to a customer’s persona, need, context and preferences that will convert better, improve the shopping experience and increase loyalty.
With a digital mindset and a focus on actionable analytics, airlines can find many opportunities to enrich and personalise the shopping experience that recognises the customer as an individual, providing a compelling service and price to meet and exceed customer needs.
With so much happening in this world, including Datalex’s own product development and innovation with Datalex Dynamic, we have published a whitepaper on the important developments in Continuous Pricing and Dynamic Offer Generation for a future of rich airline retailing.
This white paper features exclusive insights from a Datalex interview with leading international authority on Dynamic Offer Generation and Continuous Pricing – Dr. Peter Belobaba, Principal Research Scientist at the MIT International Centre of Air Transportation and Director of the PODS Revenue Management Research Consortium.
Throughout the paper we share the expert insights provided by Dr. Belobaba on the below topic and the ‘Datalex Take’ on these important areas:
- The ‘Spiral Down’ Effect and How to Avoid It
- Price Influencing Factors – Market Types, Competition and Customer Segmentation
- Conditional Willingness to Pay
- The Role of Revenue Management Post Covid
- Assessing the gains and influencing factors of moving to Continuous Pricing
- Leveraging advanced Revenue Management and Dynamic Pricing Engines in COVID-19 Reaction
- When does Continuous Pricing Work Best?
The paper also talks to the historical data predicament post-Covid, the reimagined role of Revenue Management and the important role of artificial intelligence in powering new customer experiences across all engagement channels. Enabling airlines to cross-sell, upsell and serve in the moment of need using AI to empower the customer interaction, using data for a digital-first future.