IATA’s NDC initiative paves the way for the next evolutionary step in Airline Revenue Management and Pricing

Learning behavioral patterns from passenger data

The success of Amazon or Netflix proves that shopping experience, personalized offers and transparency of offers are key success factors for retailers, when searching for a flight. I miss the same kind of shopping experience, when searching for a flight.Selling a commodity - canned food

However, new players in airline retailing like Google are showcasing that flight search can base on more than simply origin, destination and date ranges (see [Google creates a Playbook for travel] or [Google adds airfare tracking, hotel deal spotting, and filters to its metasearch] or [Google Flights now pushes flexible destination search, aiming at trip inspiration]). I am excited that in the near future apps and websites might provide features that allow me to choose from a list of offers that really fit to my needs instead of only searching for the cheapest flight.

Travelers are expecting airlines to offer the same kind of shopping experience they are used to from other industries. By implementing IATA’s New Distribution Capability (NDC) standard, airlines are able to fulfill this requirement. Early adopters in the airline industry have a significant competitive advantage, but processes in backend systems have to change. In the past Revenue Management and Pricing had to adhere to the constraints defined by limitations of inventory and distribution systems like e.g. booking classes and very limited information about passengers. NDC overcomes these limitations, since it directly connects the airline with the passenger. This allows Airline Revenue Management and Pricing to take the next evolutionary step. Today, these disciplines are optimizing parameters of the rigid inventory and distribution systems. In the near future Revenue Management and Pricing solutions will provide passenger-centric offer optimization and merchandising, thus bypassing old GDS standards and constraints that were limiting the industry for decades.

We at Lufthansa Systems are working on the next generation of Airline Revenue Management and Pricing solutions. I am looking forward to hearing your thoughts on the opportunities that NDC provides and discuss our ideas in more detail. We would be happy to meet you at the Airline Distribution Technology &  Strategy conference - please see http://www.airline-distribution.com/ for details.

Don't forget to visit our  Presentation on 30 August at 02:35pm in Berlin: "Dynamic pricing is key to customer-centric distribution" - Dr. Peter Schöber (Director of Revenue Management and Pricing, LSY)

  • Roadmap to true dynamic pricing
  • How to deal with challenges like old industry standards in pricing
  • A smooth migration path offers quick-wins and mitigates risks
  • Technology and science are available and ready to be used - what about management and organization?