Armed with mountains of data, artificial intelligence is emerging as an important tool for airlines to find the ideal fares to charge passengers, helping them squeeze out as much revenue as possible as the industry emerges from its biggest crisis.
Fed by data on everything from internet searches and COVID-19 outbreaks to weather forecasts and football results, computers are learning how everyday life influences demand for flights. In its most advanced form, AI blows up the arcane airfare codes and pricing bands that have straitjacketed ticket sales for decades.
By weighing up the data, technology providers can determine how much passengers are willing to pay for tickets and continuously reprice seats. Calculating fares using AI can lift an airline’s revenue by 10% or more, according to Fetcherr, an Israeli startup that operates a live-pricing engine.
“We are able to determine at every price point how many people will buy a ticket,” said Roy Cohen, chief executive officer and co-founder of Fetcherr, whose directors include Alex Cruz, a former CEO of British Airways. “It’s very hard to hide from a system like us.”
Brazilian carrier Azul last month announced the first public trial of Fetcherr’s demand prediction and pricing technology. Azul didn’t reply to emails asking for more information about the trial.
Fetcherr’s demand simulations are so accurate, according to Cohen, that fares determined by algorithms for flights six months away barely change by the time the plane takes off. “Almost spot on,” he said. “Sometimes to the cent.”
Aviation needs all the help it can get. Travel evaporated in 2020 as governments around the world closed borders and rolled out COVID-19 restrictions. A recovery from the pandemic should drive global airline revenue to $782 billion this year, still shy of the $838 billion in 2019, according to the International Air Transport Association. Typical annual revenue growth has been in the single digits since the financial crisis more than a decade ago. ReadMore