The airline industry is experiencing a rise in adoption of retail transformation initiatives around NDC and Offer and Order management. These initiatives aim to improve the traveler’s shopping experience and liberate airlines from legacy tech constraints.
In this blog post, we explore three ways airlines can fast-track their transformation path and sharpen their focus on airline retailing: adopting airline Offer Optimization, AI-fueled technology, and next-gen digital retail platforms.
Airline Offer Optimization
At the core of airline retailing lies Offer Optimization, which enables airlines to create customized offers based on customers’ wants and needs while making more money and providing a better retail experience. Offer optimization is essentially the ability to offer the right product(s) at the right price to the right customer in a way that is revenue-optimal for the airline.
To do this, airlines need to perfect their pricing capabilities outside of current class-based restrictions. This means price elasticity (continuously) based on demand and passengers’ willingness-to-pay. Dynamic pricing and price elasticity are two key concepts airlines must master to achieve successful Offer Optimization. To explore the topic of airline dynamic pricing, check out this blog post: What Exactly is Dynamic Pricing in the Airline Industry?
Offer Optimization strategies are being deployed by many of PROS customers, with Emirates and the Lufthansa Group leading the way. Watch this video to learn about their Offer Optimization journeys, presented by Amit Khandelwal, Divisional VP, Revenue Optimization and Distribution, Emirates and Benedikt Zimmermann, Head of Business Development, Methods and Solution, Commercial Offer, Lufthansa Group.
Artificial Intelligence (AI)
AI is another powerful tool that airlines can use to improve their retailing. It helps airlines analyze vast amounts of data in a fraction of the time and make better decisions about pricing and inventory. AI automates optimizations to provide meaningful recommendations to analysts, allowing them to focus on strategic tasks that drive airline competitiveness.
PROS has been using AI across airline revenue management for decades, and today our proven science is in its 4th and 5th generations, powering ~100 of the world’s greatest airlines. Most recently, our AI innovation efforts have been focused on ancillary revenue and how airlines can better present, price, and bundle ancillary products and services to impact the airline’s bottom line.
airBaltic is one of the carriers that leverages PROS merchandising technology to fully manage a dynamic ancillary catalogue and create demand-aligned offers based on granular commercial and market-based differentiation. Today, the airline is advancing their eCommerce with AI-fueled seat assignment pricing:
Next-gen Airline Retailing Platforms for Offers and Orders
Legacy infrastructures limit airlines from fully benefiting from Offer Optimization and AI. To open new retail opportunities, airlines need next-gen airline retailing platforms in place. These platforms are built around the customer, not around the transaction record like current PSS, which helps airlines provide a consistent experience for customers, no matter how they interact with the airline.
Next-gen platforms, like the PROS Platform for Travel, are API-based and enable airlines to partner with other travel providers and IT vendors more easily, so they can bring more products and services to market faster, which saves efforts and money. With PROS, airlines can start the process of retail transformation step by step, by bringing in retail capabilities that help increase revenue without disrupting their operations.
By bringing these initiatives at the center of their attention, airline commercial executives can pivot a new modern way of retailing to stay ahead of the market, outperform the competition, and accelerate on their path to profitable growth. Contact PROS to learn more about the path to commercial and retail freedom.