It’s one of the hottest, most-talked about topics in the airline industry today. It’s ATPCO’s goal to help move 80 percent of the industry to by 2026. It’s...also sometimes a little confusing. It’s dynamic offers.
ATPCO, your trusted data company, is here to clear up any confusion and give you the true definition of dynamic offers so we can all be on the same page.
What are dynamic offers in the airline industry?
A dynamic offer in the airline industry is the information presented to a customer before a sale (including the fare product, price, attributes, ancillaries, and other data) that is dynamically assembled and priced using dynamic pricing methods (optimized, adjusted, or continuous pricing).
In short, airlines are taking advantage of new technology to create more precise, more personalized, and more strategic offers to meet their customers’ wants and needs. It’s each airline’s proprietary, internal business decision whether or how they choose to implement dynamic offers.
Different terms for similar concepts
Different organizations can interpret dynamic pricing and offer terms in varied ways. Dynamic pricing is the methodology that is used in the airline industry to set the price that most closely matches the marketplace conditions at the time of the product offer. For some, continuous pricing is the only form of dynamic pricing. However, that approach may not be practical or beneficial for many airlines in achieving both their short- and long-term objectives.
Others think of dynamic pricing as including multiple levels of sophistication, such as optimized or adjusted pricing methods. In these, a portion of the fare creation process is dynamic.
The advantage of optimized, adjusted, and continuous pricing methods is that regardless of an airline's sophistication, implementing any of these approaches can provide the immediate benefits that can come from more dynamic offers. Continuous offers may be the goal for some, but optimized and adjusted methods can provide benefits for airlines that want to make improvements now and may even be all they need to reach their long-term goals.
The bigger picture with these three methods is that they all boil down to one common theme: they are dynamic offers.
What's the difference between optimized offers, adjusted offers, and continuous offers?
In a world where terminology is used somewhat interchangeably, it’s understandable that the phrase “dynamic offers” can be confusing. An airline may use more than one approach to create dynamic offers, and their approach can depend on elements like their scale, business model, and competitive environment.
Here’s a breakdown of optimized offers, adjusted offers, and continuous offers, each of which is a method still considered to be a form of creating dynamic offers:
- Optimized offers: Dynamic offers created from predefined products and price points with dynamic availability. Optimized offers are created using traditional ATPCO data (such as fares, rules, and services), airline availability, and Routehappy content. Mechanisms include static pricing, dual RBD validation (more price points), and more frequent fare updates (via quantum pricing). With optimized offers, humans use some automation and better technology to optimize managing data. This method focuses on publishing fares, benchmarking against competitors, and maintaining predefined bundles.
- Adjusted offers: Dynamic offers created when a dynamic pricing engine uses an airline’s unique business logic to apply dynamic price adjustments (also referred to as continuous pricing within a fare ladder) or product adjustments to predefined prices and products. Offers are created using traditional ATPCO data (such as fares, rules, and services), price adjustment mechanisms and/or bundle inclusions using a product catalog and merchandising content (such as Routehappy). With adjusted offers, humans are assisted by science like artificial intelligence and machine learning. There are dynamic adjustments made to the price or content at the time of the shopping request based on each airline’s internal business rules, leveraging science for precision pricing and offers. When people in the industry say dynamic offers, this type is most likely what they are thinking about implementing today or are already doing.
- Continuous offers: Dynamic offers created when a dynamic pricing/offer engine uses an airline’s unique business logic that is not dependent on predefined prices and products. Products are chosen dynamically from a catalog of potential offerings. Prices are determined dynamically (also referred to as continuous pricing outside a fare ladder) and may be chosen from a predetermined range or by direct link to an airline’s revenue management system. Offers are created using data such as competitive, product performance, customer, economic, and environmental insights, a product catalog, merchandising content (such as Routehappy), and new science. With continuous pricing, advanced data science creates real-time offers and pricing. Fares are not filed with this method at all, and the traditional fare management tools are transferred to offer and order management systems. The big focus with this method is new data to assist/feed the science and targeting offers to consumers effectively.
How can I learn more about dynamic offers?
ATPCO’s Dynamic Offers Design Team works together actively and collaboratively to validate problem statements and explores interoperable industry solutions. The main goal is to facilitate the evolution of dynamic offer creation and ensure data integrity from shopping to settlement. Join the team today to get in on the action, be a part of the conversation, and know more about dynamic offers.
