WASHINGTON, D.C. -- Approximately 25% of airfares, ancillaries and airfare bundles currently sold were dynamically created, ATPCO estimates.
The figure is up from approximately 15% in October 2022.
Alex Zoghlin
"We expect significant growth in the next two years as this number moves to 80%," said ATPCO CEO Alex Zoghlin, who spoke on stage Thursday at the Elevate + TravelConnect conference jointly hosted by ARC and ATPCO.
ATPCO, an airline-owned company that is the repository for traditional airline fare filings, had previously announced a goal of building the technological framework for 80% of flight offers to be dynamically generated by 2026.
The company defines dynamic offers as those in which either the price or the ancillary options put forward in response to a flight query is modified or created at the time of the query.
Dynamic fares differ from the historical airline pricing system, in which carriers respond to flight searches from a limited selection of fares they have already filed with ATPCO.
Airlines that generate offers dynamically are able to put up to 100 times as many fares and fare products into the market at a time as those that don't, Zoghlin said, because they are not bound to the legacy pricing systems that are limited to 26 fare classes. Carriers say that dynamic pricing helps them optimize revenue while offering more satisfying options to consumers.
In conjunction with the increase in dynamic offer generation, ATPCO says there has been an increase in the number of airlines that have adopted the practice. At present, 258 carriers do at least some dynamic pricing, up from 220 in the fall of 2022, ATPCO chief strategy officer Tom Gregorson said.
Sixteen airlines or airline groups, among them United and Air France-KLM, have begun using a more sophisticated version of dynamic pricing, which ATPCO calls adjusted pricing. United, for example, makes real time adjustments to its filed ATPCO fares in order to produce dynamic offers, the carrier's vice president of revenue management and distribution Dave Bartels explained at the conference.
Zoghlin and Gregorson declined to reveal all 16 carriers that are doing adjusted pricing, but they said that the list tends to align with the airlines that have been leaders in NDC-enabled distribution advancement, since New Distribution Capability is a necessary ingredient for implementing pricing in third party channels, including GDSs and corporate bookings tools. Legacy Edifact technology can't be used for real-time adjustments.
ATPCO hopes to speed the growth in dynamic pricing through tech enhancements. On Thursday, the carrier announced that late this year it will release an electronic solution called Product Catalog designed to make it easier for airlines to implement dynamic pricing.
Product Catalog will include all publicly filed fare attributes, such as cabin class and various ancillaries included in a fare, but separated from the price itself. Airlines will then be able to take that information and plug it easily into their already-filed ATPCO fares to create a wide variety of products quickly.
In the existing ecosystem, Zoghlin and Gregorson explained, airlines are required to build offers in a wholistic fashion, coupling the price and the fare attributes -- a much more expensive and time-consuming process.
A more streamlined process will enable more carriers to develop dynamic-pricing capabilities and make it easier for more advanced airlines to enhance their capabilities, the ATPCO executives said.
Zoghlin said that ATPCO is not trying to force airlines to do dynamic pricing.
"What we are saying is we want to make this easy," he said. "We need to lower the friction, lower the barriers to allow more technology providers to get the access to the data to make all this simpler. Product Catalog is a good example of that."