By Sandeep Bhasin
In recent years, the airline industry has undergone a profound transformation, largely attributed to the integration of Artificial intelligence (AI) and Machine Learning (ML). According to Global Airline Retailing Walk According to the research report, the global airline retail market is expected to reach $42.35 billion by 2030, growing at 16.49% between 2023 and 2030. Airline Retail Sales Modern companies strive to provide a travel experience that is not only seamless and intuitive, but also intelligent. covering all aspects from purchasing and booking to fulfillment. This approach transcends conventional airline and ancillary services, offering a wide range of innovative options and non-air extras such as car rentals, accommodation, excursions and events. The aim is to establish a comprehensive and convenient one-stop solution for travelers.
Airlines are strategically investing in customer-centric experiences and offerings that enhance and personalize travel experiences, including customer-centric pricing, biometrics, robotics and contactless travel, with a focus on digital self-service. Additionally, airlines are adopting AI and ML to improve operational efficiency, flexibility and real-time customer engagement, thereby enabling effective cross-selling, upselling and service delivery. The analytical capabilities of AI and ML technologies enable airlines to examine large data sets, recognize trends and patterns, thereby facilitating data-driven decision-making and personalized service delivery.
AI/ML technology has been widely integrated into the airline industry for several years and its prevalence continues to grow. Today, airlines use AI/ML technologies in various departments, including flight planning, airline networks, pricing, revenue management, and operations and personnel planning. In this article, we will look at some of the areas of AI/ML implementation in the airline industry.
Advancement of airline pricing strategies
The evolution of pricing strategies in the airline sector has seen significant progress over the years. These advancements have led to the implementation of various pricing models. Initially, static pricing was the first generation of pricing systems, and it was based on a simple set of rules, such as cost plus a fixed markup.
However, its lack of flexibility and inability to adapt to changing market conditions has led to the development of rules-based systems that use pricing algorithms, based on historical data and revenue management strategies for pricing stocks, like the second generation which was more flexible than static pricing. , but he still wasn’t able to grasp the full complexity of the market. AI/ML-based pricing is the third generation of pricing systems that captures the full complexity of the market and makes real-time pricing decisions optimized for profitability. It provides businesses with the ability to adapt and respond more effectively and accurately to changing market conditions and create personalized offers for buyers.
Improving customer experience with the power of AI/ML
The adoption of retail practices, in which airlines present themselves as contemporary retailers rather than just inventory suppliers, is a key trend in the airline industry. This shift in mindset allows airlines to improve the customer experience and generate revenue through personalized and targeted offers. marketing strategies.
By using modern retail techniques for air travel, ancillary services, packages and upgrades, airlines have been able to optimize their pricing strategies and increase revenue. Additionally, these technologies enable airlines to offer personalized recommendations based on passengers’ travel purpose and travel history. They also enable seamless integration with other travel platforms, making it easier for passengers to book accommodation and transportation alongside their flights. Travel technology partners like Saber are increasingly using the Cloud and partners like Google for the development of these AI/ML technologies. These products can help increase airline revenue by 3-5% and ancillary revenue by 10-15% depending on the implementation and the markets in which the airlines operate.
This change in economic model not only allows airlines to have more control over the offers presented to passengers, but also allows them to personalize and adapt their services according to the customer’s purchasing context and to deduce their needs of the purchasing context. By leveraging the NDC channel and intelligent retail solutions, airlines can gather valuable data on customer behavior and preferences, allowing them to create more targeted and engaging offers that meet the specific needs of their customers. clients.
The way forward for enhanced aerial experiences
Adopting AI/ML in the airline industry has several benefits but also poses some challenges. This revolutionary journey is made more difficult by the airline industry’s shift from conventional Passenger Name Record (PNR)-based retailing to contemporary order-based retailing. Creating scalable end-to-end systems that can efficiently manage massive amounts of data in real time is a critical part of this change; this task requires both technological expertise and subject matter expertise. Airlines face significant hurdles in this process, even with highly skilled analysts and large machine learning teams. First, building scalable end-to-end systems requires strict and methodical methods that go beyond traditional knowledge. For these sophisticated systems to operate smoothly, efficient production becomes necessary. Additionally, the paradigm shift goes beyond offline operations; these systems actively participate in real-time customer interaction, which requires extraordinary scalability and performance. Travel technology partners like Saber bring the domain and technical expertise to airlines to make this transition to modern retail systems. These collaborations ensure that airlines have access to cutting-edge technologies and expertise, enabling them to improve their end-to-end systems and deliver seamless experiences to their customers. By leveraging the capabilities of trusted technology providers, airlines can stay ahead of the competition and adapt to the ever-changing demands of the industry.
The airline industry is just one of the many sectors in which artificial intelligence is set to revolutionize. In a nutshell, the integration of AI-based solutions has the potential to reform and improve all aspects of air transportation, with expected improvements in efficiency, safety and overall transformation of the sector. The implementation of AI in air travel could lead to significant advancements in the passenger experience. Some potential benefits of implementing AI-ML applications in the airline industry include the ability to streamline operations, reduce human errors, and improve predictive maintenance capabilities. However, it is important to carefully consider potential downsides, such as the need to invest heavily in infrastructure and training. Aviation industry players must approach these developments with a critical eye, ensuring that they are consistent with requirements and objectives, and also select the right technology partner for the development of these cutting-edge solutions. Critical thinking empowers airlines and technology partners to navigate the advancements offered by AI/ML while ensuring they benefit travelers and society as a whole.
The author is Vice President, Software Engineering, Saber Bengaluru
