Thursday, December 15, 2005

Airline Channel Management

A lot has been written (including in this Blog) on the fragmentation of inventory and the emergence of alternate distribution platforms. One underlying theme that has not been discussed is the need for airlines to execute effective channel management strategies. There are a number of software solutions that allow hotels to manage different buckets of inventory through different channels, why doesn't this apply to airlines? The primary problem lies in the nature of the legacy airline reservation systems (CRS not GDS). It is difficult to deliver unique pricing to a particular channel if the infrastructure platform (e.g. the ability to store unique fares) is not in place. It is my belief that 2006 will see increased efforts by airlines to more effectively execute a multi-faceted channel pricing strategy, primarily designed to drive more business through specific channels. If the airlines can every combine dynamic pricing with customer value, the market will permanently change allowing the best customers to receive preferential pricing. This represents the ultimate in channel and customer relationship marketing.

42 comments:

Neil Bainton said...

Norm,

I agree that channel management is the issue, but would argue that private fares provide the tools for supporting channel pricing.

For me the issue is around how airlines adjust their segmentation strategies in light of pricing transparency provided by the internet.

This is more about marketing and less about technology.

Norm Rose said...

Neil,

Thanks for your comment. I agree that price transparency is at the heart of the need of the arilines to execute more dynamic pricing based on customer value. Providing a means to deliver private pricing to various channels is at the heart of my message regarding airline channel management.

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Mono said...

Airline channel management is not an easy subject to tackle but your post said it well.

I agree that the issue here is not really more on technology but more on the marketing aspect of enhancing partner performance and making the most of the channel sales strategy.

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