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Current Challenges and the Way Forward for Airline Revenue Management in 2020

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Airline Revenue Management in 2020

With the starting of a new decade with 2020, this is the perfect time to bring this issue to the limelight and showcase the primary challenges and opportunities that people involved in the airline revenue management face.

2019 witnessed various ups and downs in the industry, some of which includes the Boeing Saga, peak in the google flights and airspace limitations between countries which has lead to further challenges in this industry. After wrapping around the complexity of the situation and its perpetual nature, it is safe to say that AI and technological support can be seen as critical drivers in order to improve the efficiency of the ecosystem in the near future.

The key objective of the airline industry is to focus on NPS(Net promoter score) and customer issues to improve the service/product with as many as two-thirds of the companies using NPS to get a hold of the customer experience. However, you cannot access this method for identification of present and probable challenges faced by the revenue managers.

To get better clarity on this subject, below lies some of the challenges faced by the travel technology industry.

Challenge 1: NDC (New Distribution Capability) will lead to Disparity

NDC is one of the biggest challenges faced by the airline industry today, it births from the fact that NDC generates NPC. Moreover, a growing trend is seen with favour leaning towards NDC and personalization. According to the latest stats produced by IATA, the number of carriers with certified deployments has increased from 50 in 2017 to 65 in 2019.

Therefore, giving an undue leverage to just a single channel. On the contrary, the main focus of the strategy should actually be to talk to sales channels and understand how they would make sure that all ancillary components are displayed across all the channels.

Challenge 2: Growing Need for Insights in Real-time

The airline industry faces various static and dynamic challenges due to which the revenue managers are required to rethink their strategy in real-time. A problem like this can be resolved with the help of data that can be delivered quickly.

This can be rectified with the help of airline revenue management systems as they provide an intuitive UI and market performance insights with in-depth fare tracking across all the OTAs, meta sites, in order to give an airline a better and clearer picture of their competitors. More emphasis is on live data.

Challenge 3: Persona-Based Pricing

Now that dynamic pricing has hit almost all of the e-commerce ensemble, with the industry adopting this form of pricing dominantly. Persona-based pricing is bound to take dynamic pricing to the next level with price updates based on your information and demands.

Using a revenue management system allows you to take lessons from yesterday and make better decisions for tomorrow. It helps you identify routes that are popular with travellers and suggests the optimum price the ticket needs to be sold for. The prices usually start low to help fill the seats to minimum capacity, the fares then rise steadily as the date of departure comes closer. However, there are legal issues involved as some might take advantage of this benefit and others might feel trapped as it is non-transparent.

Lesson 4: Price Elasticity

Price elasticity in layman's term is how you measure the percentage of passengers who are expected to pick a provider if the rates of the flight drop. The industry has long debated on the effective measurement of this metric. However, until this date, it continues to be a valuable measure in understanding the scope for commercial opportunities, especially when there is a dip in the fares. One should make airline revenue management strategies around the same issue.

In conclusion, as we step forward into the new year, these were some takeaways for all the revenue managers in the industry. Another thing one should keep in mind is to not only focus on pricing but also look beyond it.

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Erric Ravi Erric Ravi is an entrepreneur, speaker & the founder of Storify News and Write Best Story He is the Co-Founder of The Storify News Times. Forbes calls him a top influencer of Chief Marketing Officers and the world’s top social marketing talent. Entrepreneur lists him among 50 online marketing influencers to watch. Inc.com has him on the list of 20 digital marketing experts to follow on Twitter. Oanalytica named him #1 Global Content Marketing Influencer. BizHUMM ranks him as the world’s #1 business blogger.
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