Monitoring Codeshare Partner Pricing And Inventory Availability
Airlines can improve their revenue management efforts by systematically monitoring codeshare partner pricing and inventory availability through recent Big Data developments. As part of a larger Big Data research effort, Sabre Airline Solutions® has invested in infrastructure that permits collection and processing of vast amounts of airline shopping data.
When an airline enters into a partnership with another, clearly, it aims to expand its network and increase its revenue potential. However, entering into this relationship should not be taken lightly, as putting an airline code on another airline’s metal (or vice versa) can have several different impacts on an airline’s strategy.
In competitive markets, an airline’s pricing department must be totally in tune with current fares, promotions and market trends. This, too, can become increasingly difficult when working with a codeshare partner to mutually maximize revenue potentials.
The operations research consulting team for Sabre Airline Solutions has initiated an airline shopping data research and development program with a strategic airline partner. The focus of the first project in the series, Codeshare Alerts, is to optimize the use of shopping data for the purpose of monitoring the airline’s competitiveness and pricing position in the market. The expected output will provide valuable insights from daily shopping data and assist the airline in monitoring competitor and, in this case, codeshare partner pricing activity.
Codeshare Alerts will monitor the fares of a host carrier’s partners that are available in the market on the same metal. Shopping data helps determine whether passengers are coming across shopping returns for the same itinerary marketed by both the host carrier and its partners with significant fare deviation.
Should this be true, it would indicate that the fares are out of compliance for metal-neutral carriers and might indicate that a codeshare partner is diluting revenues by placing overly aggressive fares on marketed codeshare flights, thus having a negative revenue impact on the host carrier. Provided that the host carrier and its partners have full anti-trust immunity, they can then work together to bring pricing and inventory levels back into alignment.
To further illustrate how the alerts are constructed, how they should be interpreted and what corrective actions might be taken, consider the following practical example.
Two airlines have entered into a codeshare agreement and are jointly serving the LHR-SYD market. Robotic shops could be generated to mimic potential economy passengers searching online for a LHR-SYD departure leaving Jan. 11 and returning on Feb. 5. Codeshare Alerts search through the shopping returns for comparable itineraries marketed solely by the host carrier or the partner carrier.
Shopping returns are considered to be comparable if the point of sale, booking channel, trip type, cabin, departure and return date/time, and operating flight numbers are equivalent. An alert will be issued if the codeshare partner’s fares deviate from the host carrier’s fares by more than a specified fare tolerance. From a practical point of view, this fare tolerance ensures that focus is placed on fare differences that warrant the effort associated with the fare correction.
The resulting Codeshare Alerts are streamed by magnitude of fare deviation and occurrence to facilitate the quick conversion of data into actionable targeted inventory or pricing actions. Alerts filters allow the selection of the operating carrier type, where all flights in an itinerary are operated by the host carrier or all flights are operated by a partner or flights are operated by both the host carrier and the partner.
Furthermore, business-rule filters allow the host carrier to implement a rich feature set such as tolerance levels by partner, tolerance by fixed amount or percentage of total fare, partner-specific and market-specific rules, reporting by ATI and non-ATI markets (to ensure compliance with anti-trust regulations), etc.
In contrast with standard fare comparison tools, Codeshare Alerts has a built-in fare parsing logic that accurately parses return fares by trip (outbound/inbound). This functionality enables the alerts to trigger at a lower level of granularity. Booking classes for both host marketed shopping returns as well as the codeshare mapped classes for the partner marketed returns are provided, indicating whether a pricing or inventory action needs to be performed.
The reporting engine facilitates the production of longitudinal reports to spot systematic partner bias in the pricing structure, as well as compares fare bias by the host carrier’s partners over an extended range of departure dates.
Codeshare Alerts provides the insight required to effectively monitor partner pricing and facilitates quick and targetted corrective actions. Considering the depth of analysis, strategies and effort that goes into successful airline revenue management, it is hard to conceive how the tangible impacts of codeshare agreements could be overlooked.
Codeshare Alerts is offered as a consulting-supported data service. In a typical engagement, consultants will work with an airline to identify the appropriate markets and codeshare partners to monitor. Further, they will build the business-rule engine and graphical user interface. Delivery of the data is available as either a hosted service or a daily file transfer.