Breaking the Mold with Dynamic Pricing

Airlines continue to strive to be true retailers – adopt the passenger-centric view and sell their products how they want and to whom they want. Leading brands such as Tesco, Amazon and H&M do this very successfully, so what do airlines need to do to be part of this list of retailing greats?

Let’s look at a couple of things first…

One of the key elements of NDC retailing is about transforming pricing: ‘the Sales Offer’ – a hot topic we took up in a previous blog post and IATA has defined ‘Dynamic Pricing’ as a key objective in this vision. No more fare filing – airlines have the freedom and flexibility to adjust and modify prices in real-time to keep up with market dynamics and customer needs, just like retailers do.

Pretty picture that also implies moving away from the ‘industry fares’ that have been around since the early ages of automated pricing. Well, they have their constraints and complexities but they have met the needs of airlines so far and work reliably across all channels.

By certain aspects the concept of Dynamic Pricing exists – this is what most Low Cost Carriers do but in a much simpler model: no interlining, simplified or no indirect distribution and many other compromises.

For network airlines the issue is somewhere else: ‘industry fares’ are everywhere – GDSs, PSS pricing engines, even in their e-commerce engine actually! One airline announced its intention to disrupt this landscape and launch its Dynamic Pricing in 2017. This is ambitious as indirect channels like GDSs, BSPs, downstream systems and interlining still require filed fares.

Let’s face it, changing such basics cannot happen overnight and it will certainly take some time before the whole industry transforms completely. In other words, airlines can get concerned by the transition between today’s model and the vision – cloudy skies for airlines and not less of a challenge for technology providers. This is why it becomes critical to provide a hybrid capability to benefit from both worlds.

Implementing Now the Building Blocks to Dynamic Pricing

For this reason, at Vayant, we believe that the key success factor for airlines to move to NDC Dynamic Pricing is actually finding how to manage the transition.

We have embraced it as a challenge and while the industry gets ready for a full Dynamic Pricing we are delivering now ‘Vayant Dynamic Pricing’ – a pricing solution that bridges between today’s world and tomorrow’s vision. It uses industry fares as an underlying structure for compatibility but it gives unrivalled flexibility and control to airlines to adjust prices dynamically. For all airlines that are dependent on indirect channels and interlining this gives them the flexibility they need while they keep their existing distribution capability. We are not announcing what will be ready in six months – this is already in production and used by some of our customers.

A mighty tool which is a simple add-on to the Vayant Shopping and Pricing platform. Sales and Marketing teams can easily design rules that make prices automatically adjust to the flight, purchase and the passenger context. Different pricing can be applied for different channels. This gives airlines a unique ability to answer market moves and seize revenue opportunities. A new-generation, user-friendly application that can be manipulated by ‘non-pricing experts’ and with instant impact.

Quick, agile and it works. Check!

So while NDC Dynamic Pricing is certainly the future, today airlines can get most of its benefits now without losing from their existing distribution. And that’s exactly what our mission at Vayant is: helping our customers benefit now from the promises of the future. A future that we are already addressing…

For more on Dynamic Pricing, talk to Vayant sales team at sales@vayant.com.