By: David Frangeul, Senior Director, Global Air and Ground Practices
With new technologies, such as AI-driven pricing, new distribution models, and rapidly shifting market dynamics, airline pricing and retailing strategies are constantly evolving.
Suppliers are continually testing new pricing models, dynamic bundles, and personalized offers, which means what worked for you the first half of the year or even the past quarter may already be outdated. To keep your program optimized and competitive, ongoing performance management is essential.
The top two factors impacting air pricing today
There are two key factors we are currently seeing impact traditional pricing and savings opportunities:
- New Distribution Capability (NDC): With the emergence of the modern retailing model, airline pricing is considerably changing. Continuous and dynamic pricing are the most visible developments of the airlines engaged in the NDC journey. What does that mean? Airlines can adjust prices in real time based on demand, competition, customer profile or booking time. Many more price points are proposed. Constant fluctuation of airfares is the norm and comparing airline offers becomes challenging.
- AI-driven air pricing: The expected growth of AI usage by airlines will add complexity. AI-driven personalization and inflated predictive pricing makes things less transparent and less predictable. These rapid changes mean that a static annual review of your program may leave you blind to major shifts.
What can travel managers do to keep their program competitive?
If suppliers are taking a dynamic approach, you should too. Adopting a flexible, data-driven strategy will help you continuously optimize your travel program using current internal and market data. Here are some examples of key factors you should be analyzing regularly to drive success:
Reassess the value of NDC for your program: If you identified that NDC wasn’t right for your program earlier this year, that doesn’t mean it’s not right for your program now. The NDC offering is growing with the potential for attractive fares that could match some of your traveler’s needs. Personalized bundles and fare visibility are becoming key levers for savings and traveler experience, and with more fares reserved for direct channels, reinforcing the value of booking within approved tools is essential to avoid air leakage and protect program performance. As new features are released and carriers expand their offerings, you must continue to assess whether these changes add value to your program.
Reassess potential share-shift opportunities: With airline discounts shrinking, relying solely on supplier negotiations is no longer enough. To uncover new cost avoidance opportunities, you must proactively explore share shift scenarios between airlines. Running these analyses throughout the year helps identify routes where shifting volume to a different carrier could unlock better value. Stay proactive and don’t hesitate to reallocate share on routes when better deals emerge.
Reassess travel policies and booking behavior: Lower discounts have become the norm, weakening the value of corporate contracts. That means it’s more important than ever to look beyond your supplier relationships to drive value. Travel managers should reassess corporate travel policies and booking behavior to pinpoint other savings opportunities. This includes monitoring advance purchase windows, cabin compliance, and booking tool adherence.
Stay up to date on market pricing trends: Keeping pace with industry pricing trends helps you anticipate shifts and provides a valuable benchmark to measure your program’s performance and competitiveness. Advito’s quarterly price index reports which use predictive analytics to track year-over-year and quarter-over-quarter pricing trends by region, are a critical resource for keeping up with the industry and anticipating future pricing shifts.
One of the most challenging parts of being a travel manager today is understanding how the constant change in the industry affects your program. By constantly and proactively adjusting your program to your needs and market fluctuations, using fresh data and predictive insights, you can regain control, optimize spend, and increase your program leverage.
With the corporate air contracting landscape continuing to evolve rapidly, you need a strategy that allows you to adapt your program to take advantage of new opportunities and align with today’s needs. To learn more about Advito’s dynamic performance management approach, contact our team today.