Dynamic pricing poised to drive ‘Amazonisation’ of airfare distribution, says TPConnects

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Leading airfare booking and aggregator platform TPConnects has predicted 2018 will be the year that dynamic pricing finally becomes established in the aviation sector.

The private equity-backed Dubai-based technology specialist sees Iata’s New Distribution Capability as poised to usher in an Amazon-type future for airfare retailing.

Rajandran Vellapalath, TPConnects’ chief executive, said adopting the NDC standard promises to transform the profitability of airlines.

“Go to Amazon or Alibaba today and products are sold by different retailers and wholesalers but prices are not the same. They are set according to supply and demand.

“Even hotels today are adopting dynamic pricing, it’s only when it comes to the airline industry that we do not have this.

“Consumers today accept dynamic pricing. The world is moving towards digital, everyone has a smartphone and is using them for transactions.”

Vellapalath says old ways of distributing airfares through traditional static Airline Tariff Publishing Company (ATPCO) means will cease to exist as carrier not onboard with NDC lose out.

And he dismissed claims that the shift will take place slowly because few airlines are investing in NDC, insisting everything is in place to make it happen quickly.

“Airlines and travel agents who are not up to speed with the new technology sooner or later will go out of business. They will be overcome by competitors.”

Vellapalath described the move to NDC and away from the traditional world of GDS distribution as the next big shift after e-tickets were brought in.

Existing business models will be challenged by the emergence of dynamic pricing and merchandising, added Vellapalath.

Travel agencies will no longer be able to rely on being paid by GDSs to distribute fares but will have to trade on their value and expertise, maybe by charging service fees.

And price comparison sites will also continue to transition from pure metasearch to facilitators of bookings. “They will flip their model. They understand what is happening,” said Vellapalath.

The emerging technology allows carriers to treat every single seat on every single aircraft as an individual product, an impossibility in the old ATPCO world, Vellapalath added.

“How can the GDSs be ready when they are getting their fares from ATPCO and schedules from OAG? How can they be ready for dynamic pricing?

“Will they be able to offer each and every seat on an aircraft based on the airlines changing their fares,” he said.

TPConnects claims to  be the first NDC Level 3 certified end-to-end IT vendor and aggregator offering a one-stop B2C and B2B platform for agents and merchandising engine to airlines.

Its technology gives airlines greater control over all of their points of sale through via the web, on mobile or API management, enabling them to push personalised offers to consumers.

The firm says it is also one of the few NDC intermediaries capable of reporting sales back to airline’s accounting systems.