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The role of shopping in revenue management

As airlines emerge from the pandemic, they are in a great state of turmoil. Given this scenario, there is a massive push from airlines to shift away from competing on the lowest prices and start competing on the best value they can provide for passengers by leveraging offer management and dynamic pricing.  

But how is this to be done?

This is where the analysis of customer behavior comes in. Airlines can benefit immensely by learning from past customer behavior; they can understand their passengers’ propensity to buy various ancillaries, their most-profitable segment, periods with the highest demand, etc.

Making use of this data to meet the needs of customers while deriving optimal profits, or presenting the right offer, to the right person, at the right time is the vision of NDC offer management.

How NDC offer management is making airline offers smarter and more personalized

The customers of today look for more than the ticket’s price, as their needs are evolving.

According to a statement from Elliott Advocacy, a nonprofit customer advocacy group, 77% of passengers view ticket fare as the most important factor. However, 48% take into account flight schedules, and 47% consider the availability of direct flights. Also, 36% of air travelers take into account whether they have to pay extra for their luggage and other ancillaries 

Taking all this into consideration, both airlines and travel agencies are in a scramble to personalize their offers and stand out from the competition, all while maximizing their returns.

Just like Spotify and Netflix, which leverage powerful machine learning algorithms to suggest personalized content for their users that they couldn’t have found on their own, airlines are attempting to learn from their customer’s behavior to tailor offers to their satisfaction.

This is mainly done through an NDC-certified offer management platform.

The offers that are delivered are dynamically priced, meaning they are priced based on the customer segment and the prevalent market realities. For instance, a passenger may be willing to take an indirect flight while on a vacation to save money but may be unwilling to do the same while on a business trip.

Across the world, NDC-certified offer management platforms are helping airlines to make use of real-time market information to optimize seat prices and provide personalized bundles for passengers that include trip insurance, extra baggage allowance, extra legroom across all channels.

 It is worth noting that even something as simple as identifying when your passengers travel for business and offering them Wi-Fi on that flight will go a long way in optimizing revenue.

 However, finding the sweet spot between what customers want, when they want it, and what they are willing to pay for it, is the name of the game when it comes to effective offer management.

Conclusion

By pushing dynamic offers including flights, air ancillaries, and non-air ancillaries, such as cars, hotels, etc., airlines can see up to a 2.7% increase in revenue, as per the findings of the Massachusetts Institute of Technology’s Passenger Origin-Destination Simulator.

With Infiniti’s full offer and order management capabilities, your airline can achieve the NDC vision of personalizing offers based on customer type and value irrespective of the chancel and emerge out of the pandemic-induced dip in revenue in no time.

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