In today’s fast-paced airline sector, traditional pricing models often fall short, leaving significant revenue untapped. Navigating market shifts based on intuition means flying blind. At be bolder, we understand how to navigate the challenges affecting the industry to propose intelligent solutions that maximize airline revenue. Today, we’re joined by Rita Ayala, our analytics leader, who will shed light on how be bolder co-creates cutting-edge Revenue Management solutions, empowering airlines to transform their operations and make data-driven pricing decisions for maximized profitability.
The hidden cost of flying blind: An industry challenge
In the competitive low-cost airline sector, a widespread challenge persists: accurately determining optimal flight pricing. Some airlines have historically set fares based on intuition or rudimentary tools, essentially “flying blind.” This approach often leads to missed revenue opportunities and inefficient operations because a significant pain point for these carriers is their inability to determine the correct selling price for a flight, adjusted based on factors such as anticipation. Therefore, current sales systems could be enhanced to align more effectively with actual market behavior.
On the other hand, a critical limitation for these airlines is the absence of clear visibility into competitor pricing. While an airline may possess its internal sales history, understanding competitor strategies still requires a laborious, manual process. This approach severely restricts real-time insights, hindering the ability to set competitive and profitable prices. Therefore, overcoming these traditional limitations and adopting data-driven strategies is needed for airlines to effectively optimize their revenues by making informed decisions.
Beyond manual processes: Data transforms pricing
Moving beyond the limitations of manual operations, the core objective for airlines today is to gain clear visibility into their pricing dynamics. The goal is to evolve from rudimentary tools and intuitive decisions to sophisticated learning models that continuously gather and interpret information. This transformation allows airlines to enhance operational visibility and, consequently, make more informed decisions to optimize their revenue. Our approach focuses on empowering airlines to identify the right price at which a flight should sell, based on anticipation, eliminating guesswork and the need for route owners to consult countless sources.
This advanced pricing recommendation relies on two critical data points:
- First, it integrates our client’s historical sales data for similar flights, segmented by variables like high demand, time of day, day of the week, and journey type.
- Second, and equally vital, is the incorporation of competitor pricing data, which was previously a significant blind spot.
By systematically collecting and analyzing this fresh, real-time competitor information alongside updated historical sales curves, airlines can ensure their pricing strategies are both optimized and highly competitive.
Co-creation in action: Building Revenue Management solutions
At be bolder, we take a unique approach to developing customized solutions through a collaborative co-creation process, working closely with our clients, unfolding them in strategic stages to ensure the solution aligns precisely with the specific needs and nuances of their business model:
1. Variable Identification
The process begins with our team engaging directly with the client’s revenue experts in brainstorming sessions. The goal is to pinpoint all potentially relevant variables for pricing segmentation. These include factors such as high-demand periods, time slots, day of the week, flight direction (one-way or round-trip), and other business-specific considerations.
2. Variable validation and landing
Following the initial identification, a crucial phase involves validating which of these variables can realistically be obtained from the client’s existing data and external sources such as competitor information. This ensures feasibility and defines the scope for current and future development, with some variables reserved for later stages, such as website user behaviour data.
3. Data transformation and centralization
This stage involves extracting and processing the necessary information from various data repositories. We access the client’s data from their Passenger Service System (PSS) to gather booking information. Simultaneously, we integrate crucial competitor pricing data obtained through specialized scraping services, which simulate purchases on competitor websites to capture pricing information.
This comprehensive data consolidation and cleansing process centralizes information from diverse sources, building a robust foundation for our advanced Revenue Management solutions.
The path to automation: Our vision for future pricing
The ultimate step in Revenue Management involves achieving total automation with precise verification points. This vision moves beyond semi-automatic processes, aiming for a system that automatically generates pricing recommendations. It leverages historical data and competitor pricing to validate and adjust suggestions, ensuring dynamic, responsive pricing without manual oversight. For instance, if a flight’s historical price differs significantly from current competitor offerings, the model automatically redefines its recommendation.
To meet the demands of today’s market, our vision for the future of revenue management in the airline business is also evolving beyond relying primarily on anticipation as the primary pricing variable. Instead, we foresee an intelligent, demand-driven allocation model. Prices would dynamically adjust based on real-time sales velocity, within defined ceilings and floors. This innovative approach simplifies the complex operational process of constantly changing fare classes, enabling a more agile and intelligent pricing strategy.
Tangible benefits: Real impact on airline operations
Developing a Revenue Management solution with be bolder offers their clients immediate, tangible advantages. A primary benefit is access to updated flight sales curves, providing real-time visibility into booking dynamics concerning lead time. This crucial insight was previously unavailable, enabling a clearer understanding of flight performance. Furthermore, the consolidated collection of our client’s historical sales data significantly enriches their overall data landscape, proving valuable for various reporting and analytical purposes.
Another advantage also includes the centralized, organized, and clean compilation of competitor pricing data. While airlines may have previously received competitor information through disparate means, our process ensures this data is tailored for direct comparison with their most important routes. This capability facilitates not only accurate pricing recommendations but also enables detailed analysis of competitor movements and strategies, improving pricing accuracy and competitive positioning.
Get ready for takeoff with tailored Revenue Management
We empower airlines to move beyond historical reliance on intuition and outdated data, providing real-time visibility into booking dynamics and competitor strategies. Gain greater operational visibility and enhance strategic decision-making through our co-creation approach, which transforms raw data into accurate pricing recommendations, allowing you to make dynamic adjustments to ensure optimal revenue for each flight.
Maximize your airline’s revenue potential with be bolder’s custom-built Revenue Management solutions. Contact us!
Commercial Team
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*Image by Tam Martin, pexels.com
