Guest post by Sonata:

Over the last 2 decades or so, airlines have invested heavily in developing Yield Management or Revenue Management Systems, which also helped them improve revenues by 2 to 8%. However these mature systems have been exploited to their best and are now a kind of necessity rather than a competitive edge for an airline today.

One essential ingredient that Revenue management and Yield management systems rely on is Price; however “a comprehensive pricing system” is still a gap in the industry. Pricing is still a mystical area ruled by the gut and the knowledge of a pricing analyst. Add to this the fact that a typical airline floats thousands of prices in the market and it’s very difficult to keep tab on all the prices available. Only 20% of critical fares are monitored regularly.

We feel that there is a gap in the market for a system that will help Airlines to understand pricing characteristics and make informed pricing decisions considering all the factors like competition, market dynamics (elastic or inelastic), and corporate strategy.

ARMOR from Sonata develops such a pricing decision support system which will help Airlines to get a complete 360 degree view on price, its characteristics and help Airline’s make informed decisions on pricing.

ARMOR is a first of its kind tool which will help Airlines make informed pricing decisions. It’s a unique approach that brings all price related information from internal historical data to competitor information from web and market dynamics into one Dashboard. We crunch this data in a overnight job to come up with triggers and exceptions for a pricing analyst to act on with a workflow module. It also has a powerful OR model which suggests pricing and keeps tabs on actions taken and keeps learning for future price recommendations. Getting your pricing right is an imperative as industry experts have claimed that a 1% improvement in prices translate to an 11% increase in profitability. On conservative estimates ARMOR can help airline to increase profitability by around 1%-2%.

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