Snowfall’s VP North America, Ron Glickman, discusses airlines’ recent shift towards continuous pricing, what it means and how it’s likely to impact corporate travel programs.
Continuous Pricing - How’d We Get Here?
There’s been a lot of noise in the travel industry about some of the airlines’ new NDC strategies. And with the recent announcement that our partners, Singapore Airlines, are going to be utilizing continuous pricing, I couldn’t help but remember my early days in the airline industry back in 2007.
My first manager had taken a chance on a fresh-faced full-time university student, and explained how airline pricing was limited by the 26 letters of the alphabet (well, 23 if you took out the booking classes saved for things like frequent flier redemptions, etc.)
At the time, I’d listened to colleagues in the Revenue Management department lament the fact that the fare ladder was severely limited in what they could do as all the plane’s inventory had to be divided up into these 23 booking classes. Eventually, there was some development with branded fares and unbundling of products but we’ll save that for another post.
So now we seem to be entering the age of continuous pricing within the airline industry. This is nothing new as our friends at United Airlines have been doing this for some time. It’s just growing in popularity and as one airline watches another announce profits, expect the trend to spread like wildfire.
Dynamic Pricing and Continuous Pricing - What’s the Difference?
Dynamic pricing allows airlines to offer prices using contextual information available at the time of shopping, such as time before travel or day of departure.
Continuous pricing is just an evolution of dynamic pricing. This allows the airline to offer an unlimited number of price points, in real-time. When employed, the pricing offer becomes much more granular to adapt to supply and demand at each moment in time.
Imagine, a viral TikTok post slowly pushes demand up on all flights to Kansas City. The airline is able to maximize yields by adjusting the price increases slightly for each new customer instead of selling to all of them at a set price (and if this bothers you, then please help me petition our politicians for more high speed rail in North America).
The Impact of Continuous Pricing on Corporate Travel Programs
In a managed corporate travel program, the primary focus is on savings. After all, travel tends to be the third or fourth largest controllable expense within a company.
So how will this increase in the use of continuous pricing by airlines affect managed programs? Well, those who rely on booking technology that can’t display all of the airline’s pricing offers in one shop request are going to miss out on savings and will probably see price jumps get more rigid over time.
Today, I can get UA for $7 cheaper via NDC versus EDIFACT on EWR-LAX and this is a carrier that has not removed content from the GDS…yet.
Now, the old method of picking up the phone to your travel management company will not work either if they do not have all this content manageable at their fingertips. Afterall, no business would employ agents to go to all the airlines direct NDC portals to book and manage travelers - that would be unmanageable.
But if they are charging you a phone support fee, you may want to negotiate that down for content that they are not able to book and service themselves. This goes for airlines that have XML but do not participate in the GDS, like regional Canadian and Mexican airlines such as Flair or VivaAerobus.
What are the solutions to getting the best flight prices for business travellers?
There is no future-proof solution as the UI will constantly need to evolve to match the product and pricing offering from the supplier so that the managed program can place their controls on top. But switching your online booking tool to one that is able to display, manage, and track NDC bookings with full agent support (as well as sending it off to your expense provider) is a great start.
The second thing is to speak to the travel management company supporting your travelers. Ask them what their content sourcing strategy is. Are they relying solely on a GDS? Do they use an aggregator that they will need to bill you for? And what technology do they have in place to make this content bookable and manageable?
If you don’t get good answers then you’re not going to be able to manage this spend going forward. And maybe it’s time to take matters into your own hands and start looking for a more suitable technology partner.
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