Issue link: https://pros.com/learn/i/1332157
www.pros.com 2 Creating Dynamic Airline Offers with Pricing Science The rise of digital and mobile, accelerated by the global pandemic, has permanently changed consumer behavior. Travelers now expect personal offers and consistency across channels and touchpoints. For airlines, this is an opportunity to adopt IATA's NDC (new distribution capability) quicker, take control and ownership over offer creation, and embrace airline-led, omnichannel retailing, powered by true dynamic pricing. 1. Retailing with Offers and Orders: Legacy pricing and distribution are a barrier for retail innovation. By moving to shop-order-pay retail processes across all retail channels, airlines are removing the separation between inventory and price. This helps transform the inefficient business processes into simplified, automated, and real-time digital retailing. 2. Product and Brand Differentiation: Leveraging the NDC standard, airlines are bringing in house the process of offer creation. As the single source of offer creation, airlines can achieve better control over their products and pricing. This enables greater product differentiation, enhanced offer relevance, and brand recognition, which combined improve the customer experience. 3. Revenue Drivers: By steering their direct distribution strategy through NDC, airlines unlock exciting revenue opportunities. Ancillary sales are an attractive revenue driver that airlines can benefit from by adapting ancillary products, bundles, and their pricing across various channels and markets. 4. Optimized Distribution Cost: The traditional GDS distribution model triggers increased cost of sale for airlines. Digital direct (web/mobile) and direct connect (NDC) channels offer better product differentiation at lower cost and are preferred and incentivized over legacy distribution channels. 4 Key Opportunities Of Offer Management 1. 4 key drivers 1 are expected to drive airline retail strategies for recovery: • Ancillaries and merchandising. • Revenue optimization. • Pricing optimization through dynamic pricing. • Digital web/mobile experience. 2. $40 Billion or $7 per passenger 2 is the value the airline industry might realize from retailing. 3. NDC is key to extending AI-enabled offer flexibility across distribution channels. 3 Top Retail Insights 1. PROS Survey, 2020 2. McKinsey and Company, 2019 3. NDC, AI and The Building Blocks of Airline Retail, PhocusWire/PROS Whitepaper 2020