We’re creating a more connected travel industry, underpinned by sustainability and long-term investor relations.
Business transformation – whether it involves new technology or new ways of working – is usually beneficial in the airline industry. Now, it’s time for airlines to embrace a transformation that’s already underway when it comes to data, pricing, and promotion of customized offers. We package these elements together as ‘Offer Optimization’ and it’s changing the airline industry for the better.
As we discussed at length during our Airline Offer Optimization Conference, the tools used to build an airline offer have evolved. Before, a simple Revenue Management system was enough. Now, there are more transformative tools such as Dynamic Pricing, NDC, Shopping, and Merchandising. Meanwhile, the scientific models in Revenue Management have also evolved from simple statistics to machine learning. Together, this evolved tool set delivers incremental revenues for the airlines. And as we move forward towards ‘Offer Optimization’, these tools in offer construction must evolve from seat optimization, to optimizing the whole product and service mix. This is projected to bring at least 15% in additional revenues to airlines.
Today’s travelers expect a great shopping experience. Now, the question airlines are asking themselves is, how can they evolve their offers to meet the demands of travelers?
From MIT to Copenhagen – at Amadeus, we are constantly experimenting with new ways to help airlines enhance their offers. From network and schedule planning, to revenue management, availability, dynamic pricing, shopping, and merchandising, our solutions are backed by award winning science. Amadeus’ research in the AGIFORS community has been acknowledged by the airline community as a major step forward in Revenue Management. We have won awards in AGIFORS for academic research including the ‘Best Innovation Award for Dynamic Pricing’ and our latest achievement was the ‘Competitive-Aware Revenue Management System (CARMS).’
Our technology can simplify complex data and generate insights to help airlines make informed decisions with an intelligent, data driven and automated offer management system. We’re also investing in AI and machine learning technology supported by the relevant data and processing power that airlines can use to boost their bottom line.
We offer the next generation of dynamic pricing technology for airlines and our solutions enable them to deliver and execute their offer at scale. Simulations show that first mover airlines can generate up to 7% incremental revenue moving to a next generation Dynamic Pricing Solution. In addition, we are moving the technology to the cloud in order to meet the ever-growing expectations of the digital consumer and airlines’ need for scalable capacity. Depending on their strategy, airlines can choose to integrate our technology, to construct their offer with standalone modules or go with the full Amadeus suite. We adapt to airlines’ needs and are happy to work with their partners of choice to support their business model.
As a true omni-channel provider, we enable airlines to distribute relevant offers across all channels and the complete traveler journey. This means they can differentiate to move beyond price, predict traveler needs, and tailor offers no matter the complexity involved.
Offer optimization requires that airlines embrace a new organization that removes silos between key departments. Moving from pure seat optimization to total offer optimization requires a transformation in the form of new skill sets and agile working processes that make it possible to embrace new opportunities. We can accompany airlines on their transformation journeys.
Three great examples of helping airlines achieve positive business outcomes include the instances of SAS, Southwest, and Singapore airlines. In the case of SAS, the Accenture Amadeus team recommended 11 new pricing policies to offer the best price for a given context. SAS saw a consistent 14.5% uplift in ancillary revenue for advanced seat reservations in the European market. Southwest Airlines uses next-generation science in network and schedule planning to maximize profitability with Optym and Amadeus technology. We estimate that a 20% improvement in accuracy can be converted to 1% improvement in revenue for airlines using this technology. And Singapore Airlines observed a significant improvement in fare family optimization, experiencing their highest profit in seven years.
We’re excited about what a customer-centric, data driven retailing experience can offer airlines and we look forward to working with them to achieve great outcomes.