airline pricing

Big data and analytics is the convention path to airline success, but contrarian behaviour can be underestimated, writes Tom Bacon

Much of the discussion at airline forums is focused on use of big data analytics. This includes new personalised offers, personalised booking paths, and personalised content. Complex algorithms dictate ‘the right offer at the right time’.

Pricing, already highly sophisticated based on forecast models and optimisation, now includes a variety of ancillary fees, each of which, potentially, can be dynamically priced. Teams of statisticians and data scientists develop and maintain models to maximise revenue for major airlines.

In the US political forum, Donald Trump has broken most rules in political campaigning in becoming the Republican nominee for President.  He has specifically challenged use of Big Data Analytics in political campaigns – he supposedly eschews use of big data.

In fact, his approach has beaten challengers with much more sophisticated campaign analytics.  Since most airlines now rely so heavily on big data analytics – for pricing and marketing in particular – it may be helpful to see how they, too, might be vulnerable to a Trump-like, contrarian approach.

Arguably, Spirit Airlines, an ‘Ultra Low Cost Carrier’ in the US is an example of a contrarian airline that has used a Trump-like approach to compete against more established carriers. Let’s review elements of Trump’s non-big data analytics strategy and compare it to Spirit.

1. Media spend

Big Data allows airlines to spend marketing dollars wisely on commercials that resonate with target audiences and with refined campaigns that move the needle in predictable ways with certain segments.

A Trump-ian approach is to be so outrageous that one gains free media exposure on a massive scale – not targeted at all. Spirit has created controversial commercials that are news on their own; Spirit labels fare promotions with provocative tag-lines to get attention. Spirit, too, has proven that free media can compete effectively against targeted, sophisticated media spend.

2. The right time

Big data drives sophisticated airlines to market ‘the right product at the right time’.

Read rest of the article at Eye for Travel