I'd like to thank Tom and the folks of ATP Cove for and by and participate in this talk and also
for the great support that they've provided in the dynamic pricing working group I'm one of the
industry co-chairs of the dynamic pricing working group and I'm gonna elaborate a little bit on some
of the things that Tom said as well as Peter Manish and John as well as some of the previous
speakers so so there's a lot of information on this particular slide but really I just wanted to
point out two things first of all yelling pricing isn't really the dynamic pricing isn't really new
it's been discussed in various forms for more than a decade but there was little progress made
and one of the big impediments to that progress was a lack of standardization in terms of dynamic
pricing engines really the requirement was for an airline's dynamic pricing engine to be able
to hook up into the Sabre GDS world span Amadeus and other airline reservation systems and so the
main motivation in terms of what we've been trying to do with the working group is to
bring that a little closer to reality by creating sort of the USB standard right to find the api's
and everything that are needed for that so an airline can either build its own dynamic pricing
engine or choose a vendor product and be able to relatively seamlessly have that working in the
various distribution channels secondly I wanted to really point out about the the benefits here I was
mentioning some of the figures that were quoted in the Agra force community but you've heard it
from some of the other speakers peter cited some values manish and john had also gone ahead and
cited values and they've all ranged in sort of this area you know ranging from like say one to
ten percent and we've observed similar sorts of things in terms of actual implementations and
consulting engagements we've have with customers so these numbers you know are really real the main
thing I wanted to emphasize in my talk besides talking a little bit about the progress we've made
on the pilot was sort of one other dimension that I think the some of the other speakers haven't
really talked about yet so in terms of the way I typically think of dying pricing this figure
on the bottom and I'm sorry if that's hard for some of the folks in the back to read but really
we sort of three different elements that play a role in terms of airline dynamic pricing one of
them is a customer retail and of course you've heard about that Peter spent a lot of talk about
some of michael Whitman's work in that area and there's been a lot of research on the customer
willingness to pay and incorporating that as well as some of the other customer information
that I think both John and Manish talked about as a factor in the dynamic pricing decision secondly
is inventory I bring that up here John made the point that strictly speaking on dynamic pricing
world there's really these sort of the end state is there's no need for availability but in terms
of the the specifications that we've been working on with a tipico we morally wanted to provide
a solution that will work with existing travel industry distribution standards so our goal was
to try to go ahead and have something that could be implemented essentially with today's today's
travel industry standards but also to be able to provide something that would be NDC friendly so
that as Andy says airlines move in a towards NDC that they could have the dynamic pricing
that they've done in the traditional distribution channels and apply that towards an NDC environment
in the future so those are some of our objectives and and for an inventory kind of plays a role in
the current unimportant role in the current system the third part though and this is sort of the one
that I don't think has really been emphasized by the other speakers but I did want to talk about
because I think it's important is what I call market adaptive pricing and market of adaptive
pricing is really considering on competition and I'll go and have some slides that talk about that
Peter talked about competition is sort of a macro sense okay and of case of course to an audience of
airline pricing people you know that's obviously a very important consideration but I think it also
plays an important role at kind of a microscopic level level on a transaction-by-transaction basis
and we'll go through an example of that so Alex cosmos Peter and several of the speakers have
about factors affecting consumer choice and one of the risks that Peter talked about was this risk
of kind of downward revenues by a downward price Byron spiraling and effects that could occur with
a dynamic pricing well part of that would be if we consider prices really being the only factor and
of course in Peter slide that was a case we've heard some of the other speakers Rob Albrecht
from route happy talked a lot about you know the different considerations that come into play and
some of the things that some of the experiments that they've done where they've actually shown
how price isn't the only consideration they had some pretty spectacular success stories to show
in terms of being able to upsell customers into other products so it's not just about
price there's there's other factors to consider there's schedule quality there's brand effects
you know I think competition plays a role as well and really the customer choice models I mean the
two things for that are number one is gathering data particularly for the market adaptive pricing
we really need to get information on what the current competitive conditions are once we have
that then we can apply customer choice models to try to go take into consideration how is how are
our airlines itineraries positioned relative to the competition for specific origin destination
outbound date return date combinations and then finally there's the price optimization and when
I say optimization that could be they're using science-based models like what we've developed
at Sabre or could even just be rules positioning rules that really take into account how the
airlines possession relative to the competitors so here's an example this is just an agency low
fare search on Sabre and I just showed the first three itineraries that came back up this was about
the third or fourth example that I actually did on Sabre so I mean I think it's pretty common to
kind of see these sorts of results and I wasn't trying to pick on Aeroflot or Icelandic air or
Qatar specifically but here's a real-life example and this is the kind of thing that you see when
you actually do low fare search as I think airline pricing folks you typically are kind of thinking
of matching fairs and you're thinking in a really macro level but when you actually get down to look
at the individual shopping results you see results like this they're very common now I'm going to ask
for a little bit of audience participation here and say based on what you can see here here's
an Aeroflot itinerary that's come back going via Moscow okay this particular one has the
shortest elapsed time by about a half an hour and it's a one stop the second it's priced at three
hundred and seventy dollars the next one is a combination that's an interline with Icelandic air
and SAS going via Reykjavik and Stockholm and this surprisingly isn't a whole lot longer in terms of
time it's a little bit longer but a lot higher on price and then there's a Qatar example from JFK to
Athens via Doha okay which in this particular case is the highest priced of the three and is longest
just because of the particular routing going via Doha so if you were in charge of setting up the
rules and a dynamic pricing engine and everything and you had this particular example coming up okay
for JFK to Athens and you're a tariff lot what would you suggest Ewing yes a little louder please
okay okay so so you can kind of see where their prices position drawl to the other
guys if you're in isolate Icelandic air and si yes what might you consider doing
okay and if you're a Qatar and we might have some folks from Qatar here so feel free to chip in but
you can see terms guitar it's a little bit a little bit different than the this example I
mean the price is a little bit higher but then again it's roughly the same you know
they're both one stops so it's maybe not quite as cut and dry but I think you can get the idea
um the the working group that we're doing does not we're not talking about the business logic
that goes in the dynamic pricing engine that's really for the airlines and the vendors you know
to really go ahead and define well we're all about is really creating the api's to provide
the opportunity to start employing rules and start to address these kinds of problems that we
actually see in the real world so on the pilot tom had presented a slide earlier that talked
about the the overall workflow and everything related to the pilot and what i'm showing here
is that we've as a monisha pointed out what we've done for the pilot project is we've taken the the
working specification that was ratified back in february of this year and we've since then been
working to create a virtual instance of sabre sabre shopping and pricing primarily you can
see the items in green here are the things we've actually included in the pilot so I've created
this virtual instance instance of Sabre and right now we've had both Sabres dynamic pricing engine
as well as fare logics dynamic pricing engines no specific airline partners yet but of course
they're invited to participate in this as well and we've we've got those actually communicating using
shopping results being returned for Sabre and also pricing results the progress on this and we're
also checking inventory as part of that process as well the progress on this right now is that
we've been able to validate the we've been able to take the with the working group specifications
and basically take them down just in a little bit more detail the specific data elements to include
the formats etc ok and we've been able to kind of take that information to work with with Sabre and
with fare logics we've been act actually able to get transactions to kind of go through this
including sending outputs to HCP Co but the work on that is still ongoing we anticipate having
the the pilot with actual live transactions potentially a volume and everything completed
towards the end of this year and then early next year we're going to report those results back to
the the next meeting of a dynamic pricing working group and propose the more detailed
specifications with the actual data format schemas etc so with that that concludes my talk