New pricing intelligence technologies help airline revenue managers & pricing analysts uncover profits and increase margins.
SANTIAGO, CHILE – Faced with rising operational costs, slim margins, and mounting revenue pressures, airlines must break through legacy technology barriers that impede growth and profitability, and optimizing pricing is the perfect place to start, according to Airnguru, a company that helps airlines better analyze and update fares to react quickly to market conditions, increase profits, and improve pricing effectiveness and coverage.
Airline professionals Javier Jimenez, Sergio Mendoza and Daniel Pizarro founded Airnguru in 2015 to address their collective frustration and inability to define profitable fare structures because of insufficient market data, outdated competitor prices and hundreds of thousands of pricing variables. At the time, they worked in airline pricing analysis, revenue management and data sciences.
Airnguru's scalable platform radically accelerates data-gathering and pricing analysis, enabling airlines to extend their coverage, speed time to market for updated fares, eliminate fare filing errors and modernize traditional pricing processes still used by many airline revenue management and pricing teams.
"Now that we have the technology to transform the industry, airlines no longer need to be wedded to legacy systems that soak up IT investments while failing to meet modern business needs," said Mendoza, Airnguru's CEO and co-founder. The company estimates that up to 70% of airline technology investment is currently spent "maintaining obsolete systems."
Data-driven pricing solutions like Airnguru come at a time when airlines are experiencing a third straight year of profitability but meager margins, according to The International Air Transport Association (IATA). Net 2017 airline projects are projected at $30 billion, with a 7.9% return on invested capital.
The Airnguru platform provides 100% market coverage and updates fares hourly, in contrast to current pricing processes and systems that typically provide just 10% to-30% coverage on a daily basis. With a focus on efficiency and profitability, the company's technology allows airlines to price their origin-destination markets based on the most current data, and identify price changes that reflect same-day competitor actions and other fast-moving market developments.
Avianca Airlines, the second largest carrier in Latin America, recently signed with Airnguru. The airline's goal is to improve revenues per available seat mile (RASM) and leverage current fare data to compete in a multichannel distribution scenario that includes online travel agencies, metasearch engines, social networks and other digital sources of fare data.
"Avianca intends to lead the industry in terms of intelligent IT and pricing applications," said Mario Cruz, the airline's recently appointed head of Pricing and Revenue Management. "We are eager to deploy a pricing intelligence platform that delivers the ability to maximize revenues and operational efficiencies with faster, more accurate data-gathering and analysis that gives our airline a competitive edge."
Tackling Inherent Airline Challenges Head On
According to Mendoza, Airnguru's tools address common challenges that airlines face when determining optimum pricing, including:
– Slow reaction to competitors' prices, resulting in diluted revenues and lost market share
– Fare filing mistakes caused by hard-to-handle legacy systems
– Missed opportunities from low-priority origin-destination markets that are not monitored and priced effectively by current processes and tools
– Manual pricing strategies that rely on an analyst's expertise rather than real-time data and proven processes
– Hidden immediate-revenue opportunities that are impossible to detect with current technologies.
The Airnguru founders see their technology as crucial to airlines' digital transformation strategies that accelerate data-gathering and pricing analysis. "Our pricing solution will forever change the ways that revenue managers and pricing analysts find, optimize and act on data to unlock revenues and take advantage of new pricing opportunities," says Jimenez, Airnguru's Chief Commercial Officer. "Our technology is not replacing airlines' functions. It is helping them make better and faster pricing decisions that can significantly impact the bottom line."
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
