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Dynamic Price Engine – Lufthansa Systems’ innovative solution for real-time availability and pricing
The dynamics in the airline market have significantly increased in the past years. Faced with the competitive challenges presented by low-fare carriers, network carriers are increasingly forced to introduce low-fare concepts in addition to traditional fare concepts. Most pricing and revenue management systems in use today fall short in the management of this kind of mixed market. Lufthansa Systems’ Dynamic Price Engine (DPE) provides a fully integrated approach to revenue management and pricing that serves these requirements, ultimately leading to real time dynamic pricing and availability control. By deploying this innovative IT solution, airlines gain more flexibility and significant competitive advantages by increasing revenues and optimizing distribution costs, giving them the edge they need in today’s markets. Lufthansa Systems has already implemented its next generation revenue management solution for the leading Latin-American airline TACA.
With its DPE, Lufthansa Systems offers an innovative tool that enables network airlines to improve their position when directly competing with low-cost carriers. Network carriers traditionally use a static price concept with strictly defined booking classes, while low-cost carriers work with a simple staggered price model. The low-cost airlines apply a pricing model segmenting the market primarily by charging different prices at different times before departure. As a result, network carriers feel the need to adjust their old fare structure since they face a situation of competitive disadvantage when keeping rules and restrictions in place.
The DPE enables airlines to combine both worlds. Immediately upon reception, all booking requests are evaluated in real time on the basis of a vast number of criteria including the point of sale, the utilized distribution channel, the requested travel route (origin and destination) and the prices and availabilities of competitors. The system then automatically responds to each request using either traditional booking classes or a low-fare model. Airlines are therefore always able to take the current market situation into account in order to offer the optimal price.
Lufthansa Systems’ solution meets the needs arising from the various business models. This includes low fare airlines, traditional airlines faced by strong low fare competition, as well as network carriers. Network carriers in particular need to maintain the traditional pricing structures on parts of their network while introducing restriction-free fare structures on other parts of the network. At the same time, the solution accounts for the characteristics of the GDS distribution channel which still plays a strong role for many network carriers while making full use of the advantages of alternative distribution channels. DPE is part of Lufthansa Systems' ProfitLine revenue management solution, but also can be used in conjunction with other O&D-based revenue management systems.
Lufthansa Systems generates substantial savings with managed virtual data networks
Airlines require powerful data networks to process reservations, manage passengers, baggage and cargo, and transmit passenger lists, flight and maintenance data across multiple continents and time zones. For this reason they are essential parts of an airline’s IT infrastructure. But setting up and operating a wide area network (WAN) across worldwide locations is quite expensive. With SkyConnect Lufthansa Systems offers a solution which enables airlines to save up to 30 percent of their network IT costs.
SkyConnect is a world-spanning multi-provider network, which links resources from various providers and locations to form a virtual, high-availability data network. In order to get the optimum solution it combines the best providers in each region and takes advantage of their local strengths. In addition to a wide area network SkyConnect can also integrate Internet connections to serve as an overflow for non-critical data and large files or as a back-up for the main data line. This becomes important in regions with limited communications infrastructure.
With SkyConnect, airlines benefit from a complete global solution from a single source. Lufthansa Systems manages all network components for its customers and takes care of LAN and WAN integration. The airline IT-Provider operates a 24/7 helpdesk and ensures the security and availability of networks with proven security management. Furthermore, SkyConnect offers cost transparency and control through the aggregated "Easy Billing" which delivers a single, clear invoice from Lufthansa Systems rather than individual statements from different providers.
Lufthansa Systems offers SkyConnect on a modular basis. Thus the solution can be customized and scaled specifically to an airline’s requirements. Airlines can choose from range of complementary modules, such as the Webshop, which allows airlines to conveniently order hardware, software or higher bandwidths online. Analysis and reporting tools provide detailed information about e.g. the network availability, performance and load as well as fault analyses. Further add-ons include procurement/leasing services for hardware that the customer requires for its own infrastructure and IT consulting services.
More than 60 customers are using SkyConnect from Lufthansa Systems for reliable, fast and secure data traffic between their worldwide sites. Because of its longstanding history and background in the airline industry, Lufthansa Systems is used to providing the high availability and security required by airlines. With SkyConnect, Lufthansa Systems has established an ideal framework for quickly and securely connecting workstations and operating airline applications at sites around the globe.
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