Airline Inventory Control and Pricing – Set For Revolutionary Changes

Corporate Travel as we know, is about to be turned on its head. A lot in the commercial side of air travel has probably remained static since the invention of the Global Distribution System (GDS). Now, major changes are in the pipeline. Airline Inventory Control and Pricing will undergo dramatic change. I write as a prophet would. Change is at our doorstep.

Changes In Airline Seat Inventory Control

Airline seat inventory control is due for a revolutionary change. Airlines are already working on real-time data and studying how their inventories are being booked. Airline companies are about to take better control of their inventories. There are several airlines that already have such data that few in the industry think they have. It is just a matter of time before airlines implement new sales processes across the Network. Change is at our doorstep.

Artificial Intelligence Will Play A Huge Part

We have to accept the growing involvement of Artificial Intelligence (AI) in all areas of our businesses. There will be many touch points where AI will affect our lives. Airlines are beginning to use them as well – even in the commercial side of the business. Departments handling inventories will use AI to inform them which particular airline flight is approaching an over-booking situation, and which flights are lagging far behind. This information will be available to them across their fleet of aircraft. The data will cover large segments of their future planned operations as well. The data will be available in real-time. AI is set to change how air travel is sold and bought. Change is at our doorstep. Click to read my post on how Artificial Intelligence will affect Business Travel.

Impact of Artificial Intelligence on Pricing Policies

The change, in turn, will affect pricing policies. Airlines will choose how they want to sell their excess capacities or distressed inventories. They most certainly will do that. It will result in the optimisation of inventories and work towards running more profitable Airlines. These changes are long overdue. AI now makes it possible to give these ideas flesh and blood.

This flow of information to the airline will be so dynamic that airlines will have the ability to market the available space in every cabin, with or without the assistance of Travel Management Companies (TMC). The latter option may become the rule of the day.

Artificial Intelligence Will Change Booking Processes

The larger role of Artificial Intelligence is going to force changes in how Corporate Travel is going to be booked. The TMC will certainly have to move the bulk of the bookings to the travellers themselves. If they do not do that, their profit margins will suffer. The process will be handled through Self Booking Tools (SBT) that have been available for several years. Business Travellers will have to use them. If they need technological change, they will have to learn how to handle and manage SBTs as well. They will have to become responsible for their Spend, to their own management.

The Corporate Travel Management Company Angle – More Change!

On the other side of the coin, Corporate Travel Management Companies (TMCs), will never know the real-time booking situation of any airline. They will only be aware of data that an airline is willing to share with them. That is only likely to be flights that are lightly booked and where the Airline needs TMC support. Airlines will be more flexible on flights with poor booking profiles.

The Cost Of Flexibility in Booking and Ticketing Processes

Corporates must be ready to pay the highest levels of airfares in any selected cabin if they want to be flexible with dates of travel. The much-used book-and-change-as-you-like facilities will become less and less available. If random change is part of a Corporate’s Travel Policy when it comes to booking travel, they must be ready to pay the highest levels of airfares

Airlines Will Not Need Over-riding Commissions To Leverage Business Travel

Blanket over-riding commissions based on a Corporate’s travel volumes may completely disappear due to dynamic Airline Inventory Control and Pricing. Such actions, will in turn affect the ability of a TMC to be able to negotiate corporate deals based on the total volumes of their clients. The process of negotiating corporate deals for clients will be less feasible in tomorrow’s world unless they cover a Corporate in several countries. Unless the client is a multinational and is willing to bring to the table, their travel spend in several countries.

There are some corporates that are already able to do that, but that calls for major consolidation processes. They will have to talk to a TMC that is present in all their key markets and has the technical capability to consolidate and report on the clients’ travel spend; both country-wise and across the client network.

The Management of Refunds on Unutilised Coupons

Mention is needed that Corporates will need to manage their refundable ‘coupons’ more than ever before. This was often left to the TMC to handle with no record or reports on any of the processes. This will have to change. Corporates will have to take control and manage the refund of their unutilised air tickets if they are to better manage their Travel spend. This indeed calls for tighter controls.

Conclusion

With revolutionary Airline Inventory Control and Pricing, change is very much in the air. It is inevitable. Covid-19 has only speeded up the process. Airlines, however, will not make all of their processes public because it touches their very raison d’être. The time has come for the Travel community especially the TMCs and corporate clients to take note of these changes and be prepared to handle the change that is visible in the crystal ball, and chart their own future strategies.

I write as a prophet would. Change is at our doorstep.

More Information

• Read about how Artificial Intelligence will affect Business Travel. Author: Mano Chandra Dhas

Updated 16 Aug 2023 © Mano Chandra Dhas

Note – Should you have any comments or queries, please use the comment box here below. I will respond to every comment within a reasonable period of time. I’d also be delighted if you share this blog with contacts of yours who may benefit from its contents. Please use one of the Social Media share buttons below. I’d love to have you subscribe to my blog: it is free and you will never miss a post!