The airline industry is moving from selling seats and ancillaries, to selling products and experiences. Travellers are bombarded with a multitude of products through many channels. In the end, the customer purchases the option they perceive has higher value, based on various attributes such as schedule, on-board services, fares, brand perception and distribution channel.
Mastering the art of selling the right product at the right price to the right customer is key to unlocking more revenue. Conversion is an essential goal for airlines, and attaining it requires a digital transformation. With this objective in mind, we are helping airlines achieve greater revenue through what we call “Offer Optimisation”.
The first step is to identify the traveller’s decision-making process, and to achieve that, airlines could rely on Artificial Intelligence and Machine Learning algorithms to predict passenger behaviour. One of our latest projects in this field is our revenue optimization solution based on choice modelling. Customer Choice Modelling is a mathematical approach that analyses billions of shopping sessions to detect the way people choose and what they value the most from a series of airline products and their characteristics.
There are many technological advancements that are significantly helping the airline industry, however, is the airline digital transformation just about technology? The answer is no.
At Amadeus, we are actively working with several airlines to support them in defining how to transform digitally and move effectively to Offer Optimisation. We not only provide them with the technological tools to do so, but we also help them redesign their processes, their key performance indicators and their organisational structure.
It is true that technology is a great enabler to achieve higher revenue, but equally important is the integration within the overall strategy and tactics of the different internal units, such as Revenue Management and Merchandising. On the other hand, when redefining strategy, it is vital to bear in mind secondary stakeholders, such as ground operators.
Digital transformation opens a tremendous realm of opportunities, and we believe Offer Optimisation can support airlines in becoming more passenger centric and maximise revenue.
To learn more about this subject, read our research papers in the series of “Embracing airline digital transformation”.