Understanding What is Airline Dynamic Pricing
According to a survey conducted by IATA, “71% of passengers book online or via apps, with 53% favoring the airline’s website/app and only 19% opting for human interaction. Passengers also expect transparency and all details in one place when booking online.” As the airline industry continues to opt for measures that help them cater to growing customer demands, there are still some challenges they face when it comes to pricing tickets and entertainment options. With airline dynamic pricing, companies can automatically adjust ticket prices based on real-time market data.
Airline dynamic pricing strategies ensure optimal pricing in real time. However, to create pricing models, airline companies require data on customers’ previous behavior, as well as present engagement, inventory status (availability of seats), and their feedback to create pricing that will help them set reasonable prices.
Factors like day & date including weekdays, weekends, and holidays, seat inventory and load factors (a metric that measures how efficiently an airline is using its available passenger or cargo capacity), competitor analysis and shifts in customer demand also play a crucial role in how airline companies set their prices.
Previously, airlines utilized twenty-six different classes to segment passengers into fare buckets and used to charge them differently. However, now airline dynamic pricing strategies enable companies to continuously adjust prices beyond rigid fare classes, helping them sell tickets according to market standards.
Platforms like Snowflake AI Data Cloud empower airlines to construct and price offers in seconds. By leveraging Snowflake, airline companies can incorporate real-time data and build predictive models that help them adjust base fares and set prices for ancillary services such as excess baggage fees, seat selection, and onboarding services.
Dynamic pricing can be both advantageous and disadvantageous for travelers, depending on their flexibility. Those who can adjust their travel dates may secure lower fares, while those with fixed schedules may face higher costs. Additionally, the lack of transparency in pricing can lead to confusion and frustration among consumers, as prices can change rapidly and unpredictably.
What Does it Mean for Travelers?
For travelers, dynamic pricing can lead to both greater savings and greater frustration, depending on timing and flexibility. Here’s how it plays out:
Some customers may find airline dynamic pricing strategies to be unfair, but that is only because companies are yet to bring full transparency and clarity. However, it should be noted that airline pricing strategies are created not only to increase revenue but also to cater to customers’ demands and their willingness to pay.
How Can Airline Dynamic Pricing Affect Customer Retention and Loyalty?
The use of dynamic pricing affects customer retention and loyalty both profoundly and positively. As dynamic pricing enables airlines to optimize their revenue, companies need to also take care that they are also catering to customers’ needs and demands. Unhappy customers are likely to turn to competing airlines if they feel that pricing structures are unjust, diminishing brand loyalty.
As much as the focus behind dynamic pricing is an adjustment to increase revenue, it can also be used to elevate customer experience and enhance customer loyalty. Airline companies can integrate AI with dynamic pricing models to further improve their customer service:
Personalized Pricing Strategies
Implementing personalized pricing strategies, where offers are tailored based on customer segments and preferences, can enhance customer satisfaction. For instance, offering discounts on frequent flyers or providing incentives for early bookings can foster loyalty. Additionally, clear communication about pricing policies and the factors influencing fare changes can build trust and improve customer retention.
Transparency in pricing is essential to maintain customer trust. When customers understand the factors influencing fare changes, they are more likely to accept price fluctuations. Airlines can achieve this by providing information about demand patterns, booking trends, and other relevant factors. Additionally, offering price guarantees or refunds in case of significant fare drops can reassure customers and enhance loyalty.
Modern airline pricing strategies are no longer one-size-fits-all. With the introduction of AI in aviation, companies can create segment their customers according to:
- Purchase history
- Loyalty
- Travel frequency
- Preferred routes or travel class
- Communication channels used most
Airline companies can provide personalized offers to each customer segment through dynamic pricing, enhancing customer engagement, and building brand loyalty.
AI-Enhanced Offer Management System
Offer Management Systems (OMS), powered by AI, can help airline companies create price offers while the customer is engaging with the airline company. Leveraging AI, airline companies can increase revenue and elevate customer experience. Here’s how:
- Product ranking: Showing the most relevant flights and ancillaries.
- Bundling: Grouping products into value-based packages.
- Cross-selling & upselling: Recommending better seats, more baggage, or lounge passes.
- Automated Push notifications: Delivering real-time, contextual offers via mobile or email.
This way airline companies can build trust and convenience, both of which are essential for maintaining long-term customer relationships.
Enhancing Loyalty Programs
Airline dynamic pricing strategies can be further enhanced by integrating AI to improve the effectiveness of loyalty programs by:
- Predicting when a traveler is at risk of churn and proactively offering incentives.
- Optimizing miles redemption options using real-time pricing data.
- Offering co-branded rewards that reflect the customer’s travel and spending patterns.
Airline pricing strategies can be easily aligned with the companies’ loyalty management program, which will help them increase the number of loyal customers, who always feel that they’re receiving the best value, even when prices fluctuate.
Can Businesses Leverage Snowflake AI Data Cloud for Airline Dynamic Pricing?
Yes, businesses can leverage Snowflake AI Data Cloud to enhance their airline dynamic pricing strategies. Snowflake’s platform integrates data from various sources, enabling airlines to analyze customer behavior, market trends, and external factors like weather and economic indicators.
Airline companies can build AI/ML models on Snowflake that helps them predict demand patterns and adjust prices accordingly. This not only optimizes revenue but also improves operational efficiency by ensuring optimal seat occupancy. Additionally, Snowflake supports real-time data processing, allowing airlines to make timely pricing decisions in response to sudden market fluctuations.
Snowflake AI Data Cloud also facilitates seamless collaboration and data sharing among different stakeholders in the airline industry. By securely sharing data, airlines can coordinate with hotels, car rental services, and other partners to offer bundled packages and personalized offers. This holistic approach enhances the customer experience and drives additional revenue streams.
Furthermore, Snowflake provides robust security and governance capabilities, ensuring that sensitive customer data is protected, and airline companies adhere to compliance policies.
Here are some more reasons that make Snowflake a perfect platform to enhance your airline pricing strategies:
Provides 360-degree View of Traveler Data
One of the biggest challenges airline companies is data fragmentation. Customer data, pricing strategies, booking data, inventory, and ancillary purchases are often stored in disconnected systems. Snowflake solves this challenge by centralizing data from:
- SAP BW
- Oracle
- SQL Server
- GDS and booking platforms
- CRM platforms
Snowflake creates a single source of truth by unifying data, which helps airline companies gain a full 360-degree view of their customers, inventory, and revenue streams.
Facilitates Real-Time Decision-Making with Tasks and Streams
Snowflake’s Tasks and Streams enable airline companies to process and analyze data in near real-time. Airline companies can ingest live booking data, adjust prices dynamically, and serve relevant offers within seconds, which legacy systems simply can’t do.
Allows Machine Learning and AI Integration
Airline dynamic pricing relies on advanced AI/ML models that can forecast demand, predict customer requirements, and optimize pricing accordingly. Airline companies can leverage Snowflake’s robust features like Cortex AI and other capabilities to deploy these models. Additionally, airline companies can continuously experiment with pricing models, assess performance, and update rules without downtime.
Enables Better Forecasting
Traditional Revenue Management Systems (RMS) struggle with forecasting inconsistencies. Snowflake, combined with AI models enables airline companies to:
- Demand forecasts
- Price-elasticity forecasts (for dynamic pricing)
This forecasting enables airline companies to easily optimize revenue based on customer behavior and competitor analysis, without compromising customer experience.
Why Choose Kasmo
Kasmo’s datamart architecture, powered by Snowflake AI Data Cloud, is engineered to support the key pillars of airline dynamic pricing. The solution brings together complex and disconnected airline data from flight operations, bookings, loyalty programs, pricing systems, and customer profiles into a centralized and intelligent data foundation.
With this architecture, airlines can move beyond traditional static pricing models and take advantage of real-time pricing intelligence. Here’s how:
- Real-Time Data Ingestion and Decision-Making: By leveraging data streams and near real-time pipelines, the architecture ensures that booking patterns, seat availability, and customer behavior are ingested and processed continuously. This enables airlines to adjust prices instantly based on current demand and market shifts.
- AI-Driven Pricing Models: Integrated AI/ML capabilities, such as Snowflake Cortex and custom model deployment, allow airlines to forecast demand, analyze price elasticity, and build predictive pricing strategies that adapt dynamically to customer segments and travel patterns.
- Unified View of Customer and Inventory Data: The architecture eliminates data silos by consolidating customer, inventory, and revenue data from multiple sources including GDS platforms, loyalty systems, CRM, and surveys enabling a holistic view that is essential for accurate price personalization.
- Contextual and Personalized Offer Management: Airlines can create contextual offers across digital touchpoints, including mobile apps and emails, by analyzing past purchases, travel frequency, preferred routes, and loyalty status. These insights help in crafting tailored fare bundles, discounts, and upsell opportunities.
- External Data Sharing and Collaboration: Secure data collaboration features allow airlines to share relevant insights with external partners such as hotels, car rentals, and travel agencies helping them build bundled packages and enhance ancillary revenue strategies.
- Governance and Observability: With built-in data governance, monitoring, and access controls, airlines can ensure transparency and compliance while maintaining trust in pricing decisions. This also supports clear communication of pricing logic to customers, which is critical for loyalty.
Kasmo’s architecture doesn’t just unify data; it transforms it into a strategic pricing asset. By providing the tools needed to operationalize AI strategies, monitor market trends, and respond in real time, Kasmo empowers airline companies to implement dynamic pricing that’s fair, flexible, and aligned with modern traveler expectations.
Kasmo is a leading global Snowflake Consulting Partner with deep expertise in the travel and hospitality industry. Here’s why Kasmo is the right partner for enhancing airline dynamic pricing strategies:
Domain Expertise
Kasmo understands the nuances of airline pricing strategies. Our solutions are tailored to meet the specific challenges faced by the aviation industry.
Snowflake Center of Excellence
With a dedicated Snowflake Center of Excellence in Hyderabad and headquarters in Plano, Texas, Kasmo provides expertise and technical acumen in the aviation industry. Our 80+ certified consultants ensure that Snowflake implementation is scalable and secure.
Our experts have also helped major businesses across different industries unify fragmented data into a centralized platform leveraging Snowflake. This includes building and deploying real-time pipelines, AI/ML model integration, and creating customizable and dynamic dashboards that empower aviation industry leaders to make strategic and data-driven decisions.
By partnering with Kasmo, airline companies can accelerate their journey toward creating exceptional experiences for their customers as well as increase revenue.
Conclusion
Creating dynamic airline pricing strategies is not enough. Your airline business needs to harness the power of AI and Snowflake to accelerate growth, move on from traditional pricing models and start to embrace new and advanced airline dynamic pricing models. Powered by AI, data and Snowflake, you can create prices that deliver better offers to your customers and create better margins for airlines.
Snowflake AI Data Cloud enables airline companies to unify data, empower industry leaders to make real-time strategic decisions, and support scalable AI deployments. For airlines looking to take the lead in this new era, partnering with a trusted expert like Kasmo ensures you unlock the full potential of AI. Whether you’re looking to improve pricing accuracy, increase ancillary revenue, or enhance customer retention, dynamic pricing can help you achieve your goals.
Explore how Kasmo’s Snowflake Expertise is Helping Airline Companies Create Robust Personalization Strategies. Talk to Us!
