Let’s embark on yet another wonderful journey through the skies in 2024, a year that is set to be revolutionary for airline revenue management practices. As you fasten your seatbelts for this exhilarating ride, Sciative is here to give you an inside look into the dynamic and ever-evolving landscape where cutting-edge technologies, global trends, and strategic innovations propel airlines to new heights of profitability. Keep reading to learn more about the top 6 trends that are going to be a huge hit in 2024!
Personalized Pricing: A new perspective!
Personalised pricing in airlines as opposed to normal dynamic pricing is based on the personal preferences of individuals. It is different for every customer as well as varies according to that customer’s context of travel.
This strategy focuses on value as perceived by the customer which in turn helps increase the sellability of tickets and ensure optimum customer satisfaction. The name of the game here is to sell the right ticket at the right time to the right customer at the right price.
Now, the question here is how does one predict the right time for the right customer and the right price?
Multimodal pricing: The bigger picture
In several markets across the world, airlines are facing appreciable competition from other modes of transport like railways and buses. This phenomenon is driven by many factors including price sensitivity of the local consumers, local terrain, and infrastructural advancements in the region.
This competition makes pricing airline tickets tricky. Intra-modal competition among airlines is often predictable due to familiar industry behavior. Now this is where Multi-modal pricing takes centre stage. Pricing practices need a fresh outlook where multimodal factors are accounted for to generate efficient price points based on the real demand picture.
AI Forecasting tools: Navigating through the future
The airline industry has not yet tapped into the potential of Artificial Intelligence with many still oblivious to AI dynamic pricing. This AI Dynamic pricing is fueled by precision forecasting and speed of price optimization.
The new-age pricing and forecasting models help airlines set the right price for the right customer at the right time. Additionally, invaluable insights into future trends, demand cycles, and market conditions are generated at the click of a button. By analyzing a myriad of variables, such as historical booking patterns, economic indicators, weather conditions, and even geopolitical events, the Precision AI Forecasting Apparatus equips airlines with the ability to make data-driven decisions. This empowers them to optimize pricing strategies, manage inventory effectively, and respond dynamically to changes in the competitive landscape.
The above graph is a good representation of how airfare inflation quickly changes the pricing creating a topsy-turvy affair. This behavior is the exact reason why AI-powered forecasting tools are a must for air carriers. They require accurate forecasting to brace for unpredictable market behavior that is not in their hands. Where an air carrier would lose massive revenue due to major shifts in market behavior in previous decades, now they can adapt and brace themselves for major market events.
Back to normalcy: Demand spikes on the horizon
The aviation industry posted historically infamous losses of around 140 billion USD in 2020 due to the COVID-19 pandemic. It is now estimated that the industry will post a net profit of close to 25.7 billion USD in 2024. This positive upturn comes as a result of normalcy returning to the Travel industry and demand cycles resetting along with it.
Amongst the resetting of demand, tourism traffic has returned to normal however business travel is yet to catch up to pre-pandemic levels. But an interesting trend poses the possibility of becoming a norm. The trend in discussion is Bleisure travel. When employees combine Business and Leisure in their business trips, it takes the form of Bleisure travel. Business travel on its own is estimated to not match up to pre-pandemic levels and that is due to the introduction of Bleisure travel.
These new trends have made tracking and analyzing the competitive landscape much more confusing and tedious.
Navigating Competitive landscape: Big Data to the rescue!
The airline industry is set to become more competitive in the coming years. With new airlines coming into the picture and existing ones opening their fleet to new routes, the competition will only spike in every sense. This along with the constant change in demand patterns due to trends and consumer habits makes tracking the competitive landscape a perplexing affair. According to cheapair.com, airfare changes 35 times on average for a single flight. These frequent changes in airfare from competitors add another layer to this puzzle.
To tackle problems of such scale one needs to work with large amounts of data. This data must be high-volume and high-velocity to stay on top of your competition in real-time. Big data analytics and processing technology are going to be changing the airline industry in the coming years due to the adoption of superior data processing capabilities.
An increased pace of data processing is necessary for air carriers to make real-time actions. (Actions that benefit the organization like posting competitive airfares at the right time and gaining competition intelligence)
Continuous dynamic pricing: The future of pricing strategies
Regular Dynamic pricing has been a common industry practice for more than a decade now. But this is the first time the industry has had access to large stores of data that are also processable to find actionable insights.
Continuous dynamic pricing (also called total dynamic pricing) is the practice of dynamically adjusting airfares in response to circumstantial signals, like unprecedented surges or falls in demand and competition behavior. This circumstantial pricing is absent in outdated systems that rely on age-old demand patterns and pricing practices. As technology keeps evolving, the industry’s ability to start pricing dynamically in real-time based on contextual signals will improve with it. This will help elevate our existing pricing strategies and result in a revolutionary shift in the pricing world across industries. Talking about shifts, why not shift to a greener fuel?
AirViaje.ai: Gateway to the future of airline ticket pricing!
Now that we are diving into the future of airfares, one might wonder how existing revenue management systems plan to adopt these modern concepts. The ground-level situation is that most existing systems are stuck in their old ways.
Sciative Solutions is committed to staying ahead of the curve in modern advancements. With our cutting-edge software for airlines: AirViaje.ai we provide you with a gateway into the future of Airline pricing all the while making your pricing concerns go away.
Multi-modal pricing gives you a real picture of the market where other means of transport thrive too.
Experience hassle-free inventory management with our 98% Precision AI Forecasting Apparatus. Our AI models capture real demand factors like seat priority and seasonality.
Smart actionable insights on pricing, backed by big data analytics. Streamline and simplify your inventory operations with our advanced technology.
A completely automated AI dynamic engine generating industry-leading price points & inventory optimizations to differentiate your airline from the rest.
Real-time Competition Intelligence: Comprehensive competition data available to you as and when you require it!
Seamless integrations and a quick setup period to get you pricing the right way today!
Say goodbye to the last-minute hassles and hello to strategic planning!
Now that we have taken a deep dive into the pricing trends of 2024, these trends will have different impacts on different airline markets in various regions of the world. Every region has variable market behavior and patterns when it comes to the aviation sector.
To learn more about how AIRFARE changes with LAND, stay tuned for our upcoming research article series- The Continent Series: How Pricing Works in different continents of the World. Subscribe to our research articles to get alerts when we post!
Book a demo of our automated travel solutions or contact our optimization experts at info@sciative.com.
To see how AirViaje.ai can empower your brand, ensuring it not only survives but thrives, visit sciative.com
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