Battling for the skies – Airline price wars and a possible truce
This time it was SpiceJet that triggered it. SpiceJet announced their Rs.511 offer last month that set off an airfare war, Indigo and Air India are now looking to make similar offers in order to win customers. Around the same time, the Dublin-based no frills carrier Ryan Air announced a 7% cut in fares starting another airfare war in another part of the world.
But this is nothing new! Time and again we read about an airline dropping fares for certain routes. The discounts are so steep that other airlines must jump into the fray, triggering the infamous price war. A typical offer goes something like this:
For an airline, discounting is the usual solution to manage seats across routes. For end customers, it is an opportunity to plan their travel in advance and avail really cool airfares for that trip. Overall, it looks like a win-win situation for both the customer and the airline and all seems hunky-dory. Except it’s not!
These absurdly low fares probably help an airline in increasing its fill rates, but do such offers help the airline optimize inventory monetization (in this case seats available)? Do your customers really get the perfect deal?
- Wouldn’t you, as an airline marketer be delighted with a smarter and consistent discounting mechanism rather than a limited period blast?
- While offering discounts, what if you could reach loyal customers with special offers?
- Is there some way for you to reach out to in-market customers and provide customized/personalized offers based on their individual search criteria? Can you do this at scale for all your website/app customers?
- And finally, what if you could maximize yield even while you offered discounts and delighted your customers?
Answering these questions opens up new opportunities for airline brands.
Royal (Loyal) customers – Typically airline brands resort to emails to connect with loyal customers. This has worked quite well and I assume that for tne next couple of years, emails will continue to be the primary channel for an airline to connect with registered users. But, this should not stop you from offering privilege discounts linked to their CRM ID. This will ensure that only registered users enjoy additional discounts that cannot be reused by other users. You could grow your registered user-base and win some more of your customer’s love.
Go after in-market customers
Reach out to customers that are currently active on your website or App across as many channels as possible with customized offers. Furthermore, deep link the landing page for such campaigns with the cart page and apply a customized offer.
Make it smarter
You might have implemented some these strategies already! But, it is important for an airline to make discounting a more sustainable and through-the-year strategy. More importantly, you need a real-time mechanism to push out custom offers for each user (based on loyal, in-market, firt time and many more). To do this you must,
- Gather know how of historic route-based demand and supply analytics
- Daily analytics of demand for each route in terms of searches > carts > purchases
- Partnerships with aggregators
There is an untapped opportunity to flip the discounting strategy and make it customer-centric. Result of this would be higher occupancy rates for airlines, delighted customers and probably an end to these price wars as well.
Associate Vice President, Product Management at Vizury