Why pricing alone isn’t enough-and how connected offers, corporate travel, and distribution shape commercial success.
In the past 10 years airlines have completely changed the face of air travel pricing. With the help of such innovations as Dynamic pricing, AI-driven revenue management, and real-time demand forecasting commercial divisions of airlines can respond better to the changes in market demand than ever. Now fares can be revised very quickly depending on the availability of seats, booking behaviour, season, and competition on the market. The situation is taken advantage of by many airlines, but regardless of the technological improvements made by airlines, their revenues have not grown accordingly. It is easy to understand: consumer preferences should be considered, and customer buying decisions do not depend on price but on the offer as a whole.
It might happen that the price is competitive, but if as a result the whole offer does not match customer’s needs or if the offer is communicated differently through all distribution channels the airline loses a sale.
The next stage of revenue growth for airlines will not depend only on the price but also on how well the airlines manage to combine pricing with offers, programs for corporate clients, and distribution channels information into one coherent strategy.
Price Creates Value. Offers Create Demand.
Dynamic aviation pricing sets the value of a flight at a particular time. However, the decision of whether to buy a ticket is based on more factors than simply the price.
Travellers evaluate the complete travel proposition, including:
- Flight schedule and connectivity
- Fare flexibility
- Baggage allowance
- Seat selection
- Ancillary services
- Loyalty benefits
- Corporate travel policies
- Overall convenience
Even if a ticket is priced dynamically, it can be beaten by a competitor with a better offer.
This is where many airlines have a marketing issue. Even if the pricing has gone through considerable changes, the way flight offers are created has not made much progress, as many airlines still rely on outdated methods of creating a flight offer.
Modern Pricing Meets Legacy Commercial Processes
Although revenue management systems have progressed and developed in sophistication, the surrounding business practices have mostly remained unchanged. In the case of the process of implementing corporate agreements, the main features are still outsourced to pricing systems, while ancillary products may be configured separately.
Different channels of distribution show divergent information and the customer knowledge is kept in a range of platforms.
This is why airlines are so far unable to deliver one unified offer while keeping the rates dynamic.
The main challenge is no longer the calculation of the needed fare, but rather lies in making sure that the right offer gets to the customer at the right moment and via the right channel.
Otherwise, many possibilities of gaining profit would be wasted.
Corporate Travel Exposes the Biggest Commercial Gap
The issue is most apparent in the field of corporate travel.
Corporate travel represents one of the more lucrative sectors in air travel, with established business partnerships, negotiated contracts, and any continuous business dealings keeping it on the ready side. Unlike leisure travel, corporate travel programs are imbued with far greater complexities when it comes to commercial transactions.
Airlines must manage:
- Negotiated corporate contracts
- Company-specific fare agreements
- Employee eligibility
- Travel policies and approval workflows
- Corporate account performance
- Multiple booking channels
Simultaneously, business travellers expect the booking experience to be tailored and straightforward, whereby relevant services, sufficient flexibility and bonus offers are proposed along the way instead of after being about to make their reservation.
By making inconsistent use of negotiated advantages or offering different solutions through various channels, the traveller experience and the relationship with companies are affected.
Moreover, airlines fail to obtain commercial insight into the performance of corporate programs.
Distribution Is More Than a Sales Channel
Distribution has always been viewed as a way of getting airline content to the market. Today, it serves a greater purpose.
Modern distribution defines how offers are presented, personalised, and acquired through various means such as the company website, company portals, travel management companies, global distribution system and NDC-enabled connections.
When these channels operate separately, airlines have a hard time keeping consistent fares and offered services.
The industry makes tremendous strides toward the implementation of NDC and Offer and Order Management, but most airlines still function in mixed environments, which means that modern pricing technologies are employed alongside outdated distribution methods.
As a result, it is not always possible to see the innovation in pricing in customer experience.
Closing the Gap Through Connected Commercial Operations
To increase their revenue levels, airlines need to move away from using pricing engines only.
Companies today are more successful by linking pricing, offer management, corporate programs, and distribution into a unified operating model.
This means that airlines need to have real-time insights into contract performance, corporate account activity, negotiated offers, and booking patterns so that they can deliver the same offers at all customer touchpoints.
Instead of separating commercial functions, airlines should use a platform that will make their strategy and implementation compatible.
With the ADO Corporate Portal, airlines are able to do this.
The ADO corporate portal helps to integrate all aspects of corporate account management, negotiated deals, enforcement of policy, booking processes, and performance monitoring in one platform so that airlines can be more efficient in dealing with corporate programs.
Thanks to API-first architecture, ADO is able to integrate into existing airline systems so that airlines can change their corporate retailing without creating any troubles for existing technology systems.
The Future of Airline Revenue Lies Beyond Pricing
The concept of dynamic pricing has radically transformed airlines’ value assessment of a trip. However, pricing by itself is not enough for achieving sustainable revenue growth.
The real opportunity is in converting this value into practical, uniform, and personalized proposals reaching the customers at the correct distribution channels. In the course of the airline retail evolution, competitive advantages will not be achieved merely by the availability of the most sophisticated pricing models. Rewards will be calculated, offers will be communicated, and sales will happen in harmony, all of which will translate into a smooth functioning of the whole commercial ecosystem.
Successful airline companies will not limit themselves to better pricing – they will be providing better commercial services, enhancing corporate connections, and generating more revenue in the long run.
