Airline Retail Transformation Roadmap: Architecting the Future of AI-Fueled Offers and Orders

This article is part of the Airline Retail Transformation Series, covering key topics on airline Offer and Order Management. Learn why airline executives should embrace commercial autonomy, how AI is transforming revenue management and airline retailing, and how to reap the benefits of airline-led offer creation, optimization, and distribution outside of the GDS.

Legacy infrastructure has constrained airlines’ ability to create and dynamically price offers based on individual customer attributes, deliver those offers dynamically, and fulfill the order seamlessly. The ability to do so will bring commercial autonomy to airlines, enabling them to become true retailers.

Watch this webinar with PROS experts to learn about the roadmap to AI-fueled airline offer and order management or keep reading the 5-minute blog post summary below instead.

Learn how airlines can prioritize offer optimization and drive a customer-centric offer and order management strategy powered by proven AI with the goal to deliver commercial outcomes and accelerate revenue growth.

Airline commercial autonomy: the foundation for customer-centric retailing [04:20]

The aviation industry is in the midst of a major retail transformation aimed at arming airlines with customer-centric selling capabilities. However, before going down the offer and order transformation path, carriers must liberate from legacy retail practices and steer toward airline-led retail strategies.

As the airline industry soars toward a full recovery, the time has come for airlines to reclaim their commercial autonomy. This shift demands the execution of commercial strategies guided by market dynamics and customer preferences and breaking the chains of legacy technological and commercial constraints. It's a call to abandon static fare filing and class-based pricing, embracing a modern dynamic content and pricing construction method that allows for the needed flexibility and agility to successfully meet market demand and customer trends.

Through agnostic offer and order management airlines can gain the commerce power to retail what, how and when their customers want, driving profitability through customer-centricity.

If you are an airline executive, learn more about The commercial imperative for airline CCOs.

Airline retail transformation roadmap

Defining offer optimization [07:00]

Redefining core airline revenue management paves the way for an offer optimization strategy that airlines can gradually launch across all sales channels.

• Bid price-control: Start with the adoption of bid-price control to allow for greater understanding of the capacity constraints to effectively steer your airline’s revenue strategy.
• Willingness-to-pay: Dive into willingness-to-pay and understand better the relationship between price and demand, outside the barrier of traditional class codes.
  Learn more about willingness-to-pay in the blog post How willingness-to-pay is changing airline RM forever.
• Dynamic or continuous pricing: Read this blog post to learn more about what exactly is dynamic pricing in the airline industry. 
• Contextual pricing: Optimize offers by considering trip and customer specifics, like the numbers of passengers travelling, to apply more precise segmentation strategies.
• Dynamic ancillary pricing: Expand offer optimization to all aspects of the airline product – the right to fly and the ancillaries associated. Bundle seats and ancillaries for each customer segment with the same level of RM sophistication using the latest AI technology with clarity and understanding.
  Learn how airBaltic is optimizing seat assignment pricing with the help of AI here.

“With PROS AI, we are taking our eCommerce to the next level to truly capitalize on a major ancillary revenue contributor-assigned seating." 

Jolanta Rema, airBaltic
VP of eCommerce and Commercial Distribution

Liberating distribution pipes [16:40]

Success in offer optimization hinges on channel delivery. Airlines must seize control of distribution pipes to deploy sales strategies for each channel. Airline-led offer creation and retailing, enabled on the dotcom or through NDC, empowers carriers to define the optimal product mix for each channel, optimizing traffic in a smart and scalable manner.

Enhancing marketing channels [17:40]

This newfound control empowers sales and marketing teams to execute robust customer acquisition strategies through offer marketing. Dynamic offers on websites and marketing channels, such as social media, boost conversions, while tactics across distribution channel help expand brand reach and market share. Moreover, this control feeds valuable data back into the offer optimization engine, refining retail processes based on AI-driven insights and trends.

Enabling order fulfilment [23:10]

A prerequisite for offer- and order-based retailing is to have full flexibility around it. A modular, open and order-native ecosystem in the cloud that is product-agnostic allows a high degree of agility for airlines. It helps mitigate commercial and financial risks from massive transformations by retaining operational integrity as airlines identify certain areas of value and migrate them towards customer-centric orders.

It also enables the instant use of valuable order data to feed continuous offer optimization, as well as to automate and optimize other business processes like disruptions and customer service.

Adopting transparent and explainable AI [29:00]

The new world of offers and orders unveils fresh retail horizons - to sell more, to retail better, to interact more meaningfully.

AI empowers airlines to scale these opportunities and boost profitability. But the choice of AI is critical to ensure using the right data and the proper degree of automation. As a result, retail teams gain more time for strategic endeavors and trust in the system to transition confidently into this new era.

Building a partner-open ecosystem [40:00]

As airlines embark on this retail transformation, breaking the chains of single-vendor partnerships becomes imperative. Expert value chain partnerships deliver the commercial autonomy airlines need. At PROS, we excel in fostering open collaboration with IT providers and airlines, driving the future of airline retailing, today.

Open to talk AI-fueled offer and order management? Contact PROS.

Read the next article in the series to explore four benefits of airline-led offer creation by detaching offer distribution from the GDS.