Revolution in Airline Inventory Control and Pricing

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

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.

Airline Seat Inventory
Airline Seat Inventory

Artificial Intelligence

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 doorstop.

Impact 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 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.

The Corporate Travel Management Company Angle

Technology and Business Travel
Technology and Business Travel

On the other side of the coin, Corporate Travel Management Companies will never know the realtime 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.

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

Negotiations based on volumes
Negotiations based on volumes

Negotiation of Over-riding Commissions

Blanket over-riding commissions based on a Corporate’s travel volumes may completely disappear. Such actions, will in turn affect the ability of a TMC to be able to negotiate corporate deals based on 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.

Booking Processes

All of this is going to force change on how Corporate Travel is going to be booked. The TMC will certainly have to move the bulk of the bookings to the travellers themselves. This will be done though Self Booking Tools (SBT) that have been available for several years. Business Travellers will have to use them. If they need change, they will have to learn how to manage those as well. They will have to become responsible for their spend, to their own managements.

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

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.

© 2022 Mano Chandra Dhas

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16 Comments

  1. Kenneth D'Souza

    Reply

    Mano as always you bring some great insights into Corporate travel and yes AI is going to play a huge role going forward. Enjoy reading your in-depth analysis on the subject.

    • Reply

      Thank you Ken. We already use AI in many of our daily processes. Some consciously, some unconsciously. It will most certainly replace many processes that are done manually today.

  2. Susan George

    Reply

    What a great document, Mano. So much in detail & and so much effort. Thanks for this

  3. Savio D'silva

    Reply

    The only thing I can say is that Change is the only constant Mano and one of the skills we all need to have in our bouquet is of adoption too and management of change to be able to be aligned effectively. Kudos on the great write up and thank you for sharing Sir.

    • Reply

      Totally agree, Savio. It is sad to see that many do not see change coming and subsequently have not sorted out their management strategies. They are literally caught off-guard. I am trying to tell people to keep their eyes open and to be ready with their own strategies. 😊

  4. Darryl

    Reply

    Change is inevitable. Everyone in the travel industry be it the airlines, TMCs or the end user, have to adapt to the technological changes in the market. Unfortunately, very few, especially in developing markets, have the vision or the desire to invest in modernizing their business. And hence, you will see many of the big players of the past losing business to new, agile, innovative, creative and progressive travel companies. One good example is Dubai. The old boys are really finding it difficult to compete with international players.

    • Reply

      Very true, Darryl. My quest is enabling the end user to see what is coming; but they will have to develop their strategies on their own. I can help of course. 😊

  5. Fahim Jalali

    Reply

    Excellent article as always Mano. Always enjoy your professional and expert analysis. Keep them coming.

    • Reply

      AI will pretty much work its way into everything we do. It will be a good thing, and make the world a better and more enjoyable place. On the work-front we need to have strategies to work with it. 😊

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