AI and Analytics use in revenue management in Airlines

The third wave of industrial revolution is here, and it primarily deals with Data.
Data is being leveraged in almost all industries to generate revenues,
streamline processes and make the customer experience better.

What forms the basis of AI and Analytics is data. These techniques rely heavily
on the quality and quantity of data provided. The more data one has, the
better its predictive algorithm will work and give efficient results. Aviation
industry is no different and can benefit with leaps and bounds while making
use of these techniques.

The first step to utilize Analytics is gathering data. Data can be outsourced
from various third party stakeholders. This data should include the searches
which travelers do for e.g., a Delhi to Mumbai search, in-flight purchases,
ancillary services, excess baggage, priority check-ins. This type of data can
be collected from various frequent flier as well as loyalty programs about the
customers, their spending habits, etc. Loyalty programs create a strong
customer base and have huge chunks of data. Credit card companies can
also be a good source to get an idea about the earnings and expenses of
the customer.

Once the data is collected, the next step involves segmentation of market
needs according to customer base and doing daily price adjustments
through historical and real-time data available through these sources.
Passengers should be identified as business class, leisure travelers, corporate
bookings or emergency passengers. Passengers can further be demarcated
into demography, location, group size and travel purpose to price the ticket
more efficiently. Prices should reflect granular level customization. For e.g.,
even the weather forecasting data can be used; If it’s a hot sunny day
outside, airline staff can be instructed to upsell more drinks and stock water in
order to react to increasing market demand and better customer
experience.

Apart from these, loyalty programs are an efficient way to track how well
customers are responding to offers. Multiple booking passengers should also
be recorded and discounts should be provided to them in order to retain
them and increase the customer base. Once a customer sticks, they might
recommend the airline to their peer circle thereby increasing onboarding.
Prices can then be tweaked according to their needs as and when they
travel.

Social media can also be leveraged to gain better revenue. For e.g., IPL fans
can be identified via their status updates and if a seat is going empty in a
DEL-BOM flight, and Mumbai has an IPL match there; fans can be targeted
who’d be willing to travel to Mumbai and hence send a customized price
offer to them.
Various travel booking websites like goibibo, makemytrip can be used to
check pricing and routes offering. Data scraped from these sites can give an
idea about competitor price offerings, routes which are frequent and busy
and thus help in pricing better. They also provide information about the
booking period and price fluctuation which might come in handy.
Another idea is to track and make use of the cancellation data; the number
of people cancelling flights and the time when they cancel before date of
journey. These can be used to offer better prices to customers who have
cancelled in other flights. Offering more flexibility to customers in booking
options can also increase revenue.

With the help of AI and Big Data analytics, route profitability can be
optimized. A certain route which has heavy traffic can be used to increase
revenue. Introducing more business class seats in that route could increase
revenue as they are ought to take more in-flight purchases as well as opt for
increased baggage. Flight timings as well as prices can be tweaked in order
to measure for any upticks in the increase in sales or booking time.

AI can be used for competitive marketing intelligence to run targeted

campaigns. Customer identification through spending habits, location can
be used to build brand and drive sales using digital campaigns. Inflight
entertainment services can also be targeted, for e.g., a passenger has been
identified who had posted on Facebook about travelling to Bangalore, the
inflight entertainment can begin with an advertisement about Bangalore
(getting revenue from Karnataka Tourism) and provide him with availability of
flights for the same. This might even lead to an upgrade, him ordering in-flight
snacks and so on.

AI can also be used for customer feedback, interaction, solving search

queries with a self styled service kiosk at the airport. Feedback in digital
format can be used to analyze customer sentiment. This will reduce the need
for airline staff thereby reducing cost.

Factors such as a traveler’s book-to-flight time, approximate arrival time at

airport, advance purchase window, the number of checked-in bags, party
size and past ancillary purchases through frequent flier cards can be tracked
and used to optimize revenue by subscribing him with the best custom made
offers.

All these steps need to be implemented at the earliest in order to stand out in
the industry. A pilot project on a low risk route incorporating these measures is
the first step towards full fledged implementation.
Sources:

http://www.airnguru.com/blog/airline-revenue-management-artificial-
intelligence-and-big-data
https://www.pros.com/blog/improve-airline-revenue-management-dynamic-
pricing-ai/
https://www.techemergence.com/airlines-use-artificial-intelligence/
https://www.pros.com/blog/improve-airline-revenue-management-dynamic-
pricing-ai/