How Aligning Pricing Information to Commercial Strategy Increased Revenue
In the era of intense competitive pressure, airlines are focused on keeping their offers at the right price in the marketplace, which doesn’t leave them enough time to review pricing information and how it aligns with their commercial strategies.
While this airline’s market segmentation was aligned with their goals, their revenue was lower than expected. It became evident that the commercial strategy was disconnected. Busy focusing on the daily operations, this airline was unaware of the factors that created misalignment and revenue leakage.
This case study outlines how ATPCO Consulting helped a large airline identify where their pricing information was not aligned to their strategy and recommended corrective actions that resulted in a 5% annual marginal revenue increase.
This airline lacked the tools and total product information they needed to make good decisions about their lower-tier markets. Their segmentation was good, but not all the elements of those fares matched the company's strategy. It was hard for them to pinpoint these areas that needed to be adjusted, and sometimes data coding was more expedient than efficient.
We researched each market to find misaligned base fares, fees, and taxes. We calculated the total price of these fares and compared them to competitor public fares. We studied cabin, fare class, RBD, dates and connections as well to find O&Ds where the pricing strategy wasn't met.
Coding best practices
We delivered a list of problematic markets and fares that could use add-on construction to simplify and streamline the airline's database and coding effort.
Our consulting team designed and implemented analytical techniques to mine existing pricing data and identify misalignment to strategy.
Based on our findings and recommendations, this airline restructured their market segmentation based on their revenue generation—maximizing their time and resources allocation—and redesigned their market analysis process. This airline also included new tools that allow them to analyze data not only by the base fare amount, but based on the overall total product. Because of all recommended changes being implemented in the pricing department, our customer estimates an increase of 5% in their YOY revenue.