As of July 2024, 27 percent of offers in the marketplace at any given time were generated dynamically. Our industry goal is to increase that to 80 percent, so there is still a way to go. As we continue this journey, some global airlines have invested millions in new technology to deliver more than just dynamic prices. They are generating truly dynamic offers that include ancillaries and other product elements. On the other end of the spectrum, airlines of all sizes have not yet tried to use dynamic offers of any kind.
In 2024, our goal as an industry should be to agree on the standardized elements and data that all airlines need, and should have access to, in order to deliver dynamic offers to customers at scale. ATPCO and twenty of the largest airlines in the world unearthed insights about how we can help each airline deliver a dynamic offer that’s more targeted to customer preferences and optimized for their business.
1. Access to the right data
We’ve identified five types of data that will be required to move forward into the next generation of price calculation:
- Foundational data
- Competitive insights
- Improved product performance insights
- Improved traveler insights
- Improved economic and environmental insights
Each of these facets of the offer calculation includes a huge amount of data. ATPCO processes more than five billion changes to current pricing data each day, and that data will grow exponentially as we further build out all five of these data categories. Making the transition to dynamic offers involves a migration from traditional rules-based process to data science–based process.
An airline cannot just rely on its existing rules-based offer systems for enabling dynamic offers; they need to build out their own data science capabilities or engage with vendors who can work with these very large datasets (3Victors, acquired by ATPCO in 2023, is helping us accelerate our strategy and deliver new datasets). This volume requires more micro-segmented data with additional context to drive personalized, dynamic offers. For example, historically, segmenting might have meant differentiating between a business traveler versus a leisure traveler, but micro-segmenting data can get more granular, showcasing the differences between a family traveling to a beach vacation and a honeymooning couple. With airlines' own strategies and data science, the industry can get one step closer to true modern airline retailing—getting the right offer to the right customer at the right time.
2. Prioritize dynamic prices and ancillaries
The leading-edge airlines are employing both dynamic price adjustment and adjusting the content within offers dynamically by bundling additional ancillary services with their offers. For those only using dynamic pricing, a next good step would be to move toward more dynamic content. After the base ticket price, ancillaries are a major decision factor for flight shoppers, with 22 percent saying Wi-Fi is the most influential factor when selecting a flight, followed by free food and drink and legroom.
Curious about what else is driving consumers’ buying behavior? You can access hundreds of global flight shopper insights in ATPCO’s newly released 2024 flight shopper survey report. From upgraded seat visuals to business versus leisure buying behaviors, we uncover what today’s flight shoppers are expecting when it comes to dynamic content.
3. Separate product from price
Airlines need access to product attributes to craft dynamic offers that better match what is important to each customer so they can create differentiated offers using more than just price. IATA paved the way by separating product attributes in their NDC standard, and the industry should embrace this concept. Once airlines know more about their travelers’ context and desired attributes, they need a new mechanism to craft a more customized offer, and that mechanism is ATPCO’s Product Catalogue solution.
The Product Catalogue will contain all the individual items that can compose an airline offer. Airlines can package offers in a multitude of ways to create the best match for each traveler type. This catalogue of products separated from prices has three separate, but related, use cases.
First, is the airline’s own catalogue in their offer system. Their offer system, armed with the catalogue of product and service items, allows them to construct an offer in real time based on shopper context and the attributes each customer values most. The airline can have total flexibility to define new products quickly at any time and to have total flexibility in what to include in an offer.
Second is the Supplier Catalogue. This catalogue would contain the information of the markets and products an airline intends to share with their alliance, marketing, and interline partners. For example, if a retailer airline is answering a shopper request that will require travel on code share or interline partner airlines, they need data for the products and services offered by each of those potential partners to message the best sub-offer.
Third is an Airline Profile, which allows airlines to publish to sellers and aggregators the markets they serve and the products they offer. As the sellers and aggregators field requests from shoppers, they can use this information to message airlines for the offers that match the customers’ needs. The Airline Profile may also contain the applicable merchandising content so the dynamic offers can be presented in a compelling way. One major opportunity is for airlines to provide visuals using Routehappy Premium UPAs (Universal Product Attributes) for things like premium experiences. UPAs describe an airline’s fares, products, and services with visual messaging, images, videos, and cabin tours, all of which can help airlines provide shoppers with something tangible that highlights the unique elements of the offer.
4. Maintain competitive and downstream insights
As a fare filing entity, ATPCO had a unique opportunity to observe an interesting trend that’s happening as airlines increase the volume of dynamic offers. They are actually also increasing their volume of filed fares. Airlines using dynamic offers are experiencing two things.
First, they are seeing the value in creating more segmented offers to provide airline shoppers with the right offer. Second, airlines are realizing that they benefit from having that information available to them in their end-to-end, downstream processes, which is where filed fares come in. While dynamic offers help with the sales process, it’s important for airlines to have a record of that data to support servicing and for their own bookkeeping and analysis, while network airlines also need the data to flow to their interline partners.
5. Work together
It’s exciting to see so many airlines start to experiment with dynamic offers, which give consumers more relevant choices and deliver higher revenue. Already, dynamic offers are generating massive amounts of data, and airlines are seeing that they will need infrastructure to manage that data, retain competitive transparency, and have the needed data available downstream. This is where ATPCO’s standards come in.
Managing dynamic offers with an eye toward the data science that supports billions of offers generated from individual product attributes and variable prices requires collaboration across the industry and access to newer technology, including data clean rooms and Product Catalogues. ATPCO is here to help develop standards, data solutions, and tools to drive innovation at scale and bring a dynamic offer world to life.
As long as airlines prioritize standards and embrace these new technologies, we can tap into the potential of dynamic offers and get to 80 percent of airline offers in the market.
Want to talk dynamic offers with us?
