Emirates Airline – Pricing Case Study

Executive summary

Pricing denotes a turning point for the Emirates Airline in addition to being a high influence department. The major attention of the pricing department is to satisfy diverse target markets ranging from Dubai to the rest of the world and from the rest of the world to Dubai. While strategic pricing relies on seasons, tactical pricing concentrates on confined and short-range sales as well as classes sold on. There are numerous and different tools employed in pricing as outlined in this report. The practice of settling at a price happens as per different listed steps. Operational pricing is answerable to activity price-work packages. It is vital to comprehend fare codes and read them sagely as they signify a fare found on a ticket.

Introduction

Pricing signifies a landmark corner for Emirates airline as well as a department having a high influence on the group. The major concentration of the pricing department is to satisfy diverse target markets ranging from Dubai to the rest of the world and from the rest of the world to Dubai. Competitive analysis exists in a bid to know the price that competitors hold and strive to match them, and market analysis exists with regard to demographic study. Strategic pricing depends on seasons while tactical pricing concentrates on restricted and short-range sales in addition to classes sold on.

The practice of getting a price occurs as per the following steps, viz. instigating a market analysis and deciding a tactical or strategic price, discussions involving outstation and pricing with the aim of concurring on the price, sending concurrence to head office, filling price in ATPCO, and assessing price policy subsequent to its going live. The factors that influence price include competitive pricing policies, product/services of Emirates airline, economic situation, affiliations, seasons, and market share. This report underscores information surrounding pricing coupled with giving recommendations with regard to the Emirates airline.

Strategic pricing department

Strategic pricing department is accountable for the following:

• Bettering Route Productivity via optimal network pricing activities.
• Checking, reporting and responding to international competitor action and fare charges.
• Developing Pricing System and associated systems from a business viewpoint.
• Easing streamlining of Procedures and Processes.
• Offering Fare Data to Scheduling New Routes.
• Pro-actively discovering chances for fare increases.
• Scrutinizing fuel price.

Generally, outstations have a tendency of possessing transactions and a structure; slicing corporate into ranks derived from the profits they make for Emirates, and every rank entail a specific discount proportion on flights to various destinations.

Tools employed by pricing

Airfare

Airfare is critical in promoting fares and as well identifying a corporate or a different private section. Airfare permits outstation to know fares being nominated, and permits pricing to endorse it and be aware of competitor fares, either illustrating cancelled, new and revised. The tool permits the station to gather the right information with regard to market and changes the competitors are making.

Route analysis

Route analysis bears significance when discovering unconstructive and weak routes controlled by inward and outward environment. New route analysis generally considers the fare attributes from competitors, and afterward the team scales fares from competitors in the GDS.

Yield analysis

To know the cabin class doing well on a given route, yield analysis is carried out concerning analysis of standard fares for each cabin class.

AQUA reports

AQUA reports have top selling segments with regard to the amount of coupons traded and profits produced for a particular segment. AQUA reports enclose information on passengers that have already flown. This is a vital tool to get sales for particular periods.

Competitor analysis

Competitor analysis is an excel sheet that is updated monthly and is carried out for the far-east continent. It helps outstations to realize the situation of competitors with respect to prices and location of their stations.

Interline agreements

Interline agreements handle other airlines where it has the accountability of trading documents within a segment and as well soaring to an offline segment with a different airline. Interline agreements engages two or more airlines on a similar route. Interline traffic agreements are of three kinds namely:

• Uni-lateral agreement- involves EK trading their ticket accumulation but not different airlines.
• Bi lateral interline agreement- entails both route interlines, where different agreed airlines trade their ticket on routes EK flies to and does not fly to.
• Multi-lateral interline traffic agreement- contains no carrier concurred upon to possess an interline accord with. If a carrier is a part of IATA, they can trade upon their stock. Prior to making a concurrence, EK verifies the financial conditions and risk management capabilities of other carriers, whilst bringing together a security deposit.
• Special prorate agreement is a single year concurrence between carriers having an interline agreement, in support of a fixed segment and secured the booking class.
• Round the world agreements- entail agreements centered on international paths.

This agreement has advantages that include:

• Better cheaper rates.
• Higher revenue.
• Improved flights to offline sectors.

Pricing distribution

Pricing distribution is a panel of 28 individuals accountable of deciding the fares in every GDS. ATIPCO company is accountable of allocation of fares in every GDS. They have a tendency of helping outstations with any difficulty with fares.

Staff travel

IATA letter is used in acquiring reductions with different airlines for employees, if EK has no relationship with the other airlines. Z fares have two classifications namely: sub-load and confirmed. CAT wider can be reserved for a period of ninety days and below is a confirmed ticket. CAT 90 is offered for close family with just two tickets booked per year for every relative, the employees and wives obtain unlimited tickets. CAT 99 can merely be flown on economy class. It cannot be refunded and re-routing is prohibited. Six coupons are permitted on CAT C firm, CAT wider, and CAT 99. Annual leave ticket is just four routings permitting on a ticket.

Global Distribution Systems team

In pricing, the Global Distribution Systems (GDS) team is accountable for affiliation upholding with GDS’s or Computer Based System (CRS). Outstations are charged on sectors being traded on GDS’s. Interestingly, the prices of fuel in a nation are paid by the outstations. Fairlogics denotes an online platform meant for cancelling out GDS’s and permitting travel agencies examine and reserve inventories on airlines and was accepted by Emirates in the year 2007 and might be a strong substitute for GDS’s.

MIDT signifies a file that encloses every flight and transaction on an international level and much more appropriate information. For security purposes, operation managers have to set a limit on the number of tickets that can be sold by an agency. The amount of the limit hinges on record and the form of financial deals of tickets issued. The operation manager in every nation should always maintain the price of the GDS low and restricted.

Pricing

Operational pricing are accountable to activity price work packages suggested and demanded by outstations. Remarkable terms to discern are sales period, of the time customers can buy; and travel period, when they have to fly on particular dates. Fare codes have to be comprehended and read sagely for they signify a fare found on a ticket.

For instance, TS1MPCZ1; T denotes the class (RBD), while S signifies special fare, 1M the ticket period, P symbolizes promotion, CZ the nation code, and 1 signifies published. The last digit on can contain different integers, where 1 stands for published fare, 2 for private fare, 3 for corporate fares, and 7 for IATA fare (where no fare is given by EK). The starting letter could be B, U, M, E, W, R, or Y signifying annual fares. When a starting letter is X, L, T, or Q, it denotes tactical fares in the order of lowest to highest.

Outstations must check and agree on cancellation regulations and ticket fees. The first stop over are without charge, and the second onwards are charged. Corporate deals as well fall under the management of the team. Outstations generally use a work package to assess the pricing superintendent in addition to estimations, with respect to clear validations specified by the outstation and market aspects. Pricing superintendent generally cuts down fares to obtainable structure for corporate reductions coupled with when an exceptional request is prearranged by the outstation. Fare regulations have twenty categories.

Global deals serve corporations, which can pool more than $750,000. Nevertheless, pricing and outstation have disagreements with respect to reducing prices. The aim of stations is to trade more, while the aim of pricing is to increase yield. When there is a great EK market share, it is not necessary to reduce the price, and outstations must understand this. With respect to corporate deals, special fares according to their particular pseudo number are filled for travel agencies.

Conclusion

Pricing denotes a landmark corner for Emirates airline in addition to a high influence department. The major attention of the pricing department is to satisfy diverse target markets ranging from Dubai to the rest of the world and from the rest of the world to Dubai. Strategic pricing depends on seasons while tactical pricing concentrates on restricted and short-range sales.

Global deals are meant for corporations that can pool more than $750,000 for firms that cannot pool such an amount cannot operate competitively in the global arena. Pricing and outstation have differences with respect to cutting down prices. While the aim of stations is to trade more, the aim of pricing is to augment yield.

Recommendations

• Pricing and outstation have to work together and thus handle their disagreements with respect to price reductions with the aim of maximizing profits. When EK market share is high, prices should not be reduced as a way to make higher profits.
• Global deals should not be restricted to corporations that can add up $750,000 to avoid locking out some corporations. The main factor should be capability and reputation instead of fund.