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Finnair introduces "continuous" pricing model

Finnair introduces "continuous" pricing model

Old Jan 17, 2023, 6:09 am
  #1  
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Finnair introduces "continuous" pricing model

Finnair introduces next steps towards modern distribution


Finnair continues the journey towards enhanced retailing and introduces next steps towards a more dynamic, customer-centric selling through modern distribution channels.

Starting early 2023, Finnair will gradually implement continuous pricing in modern distribution channels – through Finnair.com and Finnair mobile App as well as NDC-enabled channels for agent partners. Through continuous pricing, customers will not experience large price increases between booking classes as pricing is not tied to the 26 legacy price points.

https://easy.finnair.com/en/finnair-ndc


Finniar claims "competitive pricing". I doubt it. We've seen a lot of horrendous pricing already, I guess abandoning traditional bucket pricing will only mean no upper limit to pricing.
I am sure they will set a floor price, that their competitive continous model never will go below.
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Old Jan 17, 2023, 6:29 am
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Interesting to see how this develops. Seems like the old Y, H, B etc. booking classes will soon be history. Will prices fluctuate even more now? How will ticket changes be priced?
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Old Jan 17, 2023, 7:32 am
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Originally Posted by intuition
We've seen a lot of horrendous pricing already
I have seen very good pricing in recent history
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Old Jan 17, 2023, 7:41 am
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This will make everything even less transparent.
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Old Jan 17, 2023, 8:19 am
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I don't know all the details. What this means I think is that there will be different price points per selling class. When AY claims the price will not increase it might be correct, as they base fare might still be the same. But they might decide to sell fewer seats at that base fare before using the next price point within the same fare bucket.

Let's look at ZRH-HEL fares:

Results from https://www.ExpertFlyer.com
Code:
Fare Information Search:

Departing ZRH on 01/17/23 for HEL
Flying AY
Viewing in currency CHF
Show Fares for All Travel Dates

Fare Basis Airline Booking Trip Type Fare Cabin Effective Expiration Min/Max Advanced
Class Date Date Stay Purchase Req
ZNN0S9CZ AY Z One-Way 134.00 (CHF) E
ONN0S9CZ AY O One-Way 145.00 (CHF) E
QNN0S9CZ AY Q One-Way 165.00 (CHF) E
ZNN0S9FZ AY Z One-Way 178.00 (CHF) E
NNN0S9CZ AY N One-Way 187.00 (CHF) E
ONN0S9FZ AY O One-Way 189.00 (CHF) E
QNN0S9FZ AY Q One-Way 208.00 (CHF) E
SNN0S9CZ AY S One-Way 212.00 (CHF) E
NNN0S9FZ AY N One-Way 230.00 (CHF) E
VNN0S9CZ AY V One-Way 239.00 (CHF) E
SNN0S9FZ AY S One-Way 255.00 (CHF) E
LNN0S9CZ AY L One-Way 269.00 (CHF) E
VNN0S9FZ AY V One-Way 282.00 (CHF) E
LNN0S9FZ AY L One-Way 313.00 (CHF) E
MNN0S9CZ AY M One-Way 313.00 (CHF) E
MNN0S9FZ AY M One-Way 356.00 (CHF) E
KNN0S9CZ AY K One-Way 362.00 (CHF) E
INN0S9CZ AY I One-Way 400.00 (CHF) B
KNN0S9FZ AY K One-Way 405.00 (CHF) E
HNN0S9CZ AY H One-Way 416.00 (CHF) E
HNN0S9FZ AY H One-Way 460.00 (CHF) E
BNN0S9CZ AY B One-Way 479.00 (CHF) E
RNN0S9CZ AY R One-Way 481.00 (CHF) B
INN0S9FZ AY I One-Way 487.00 (CHF) B
BNN0S9FZ AY B One-Way 523.00 (CHF) E
YNN0S9CZ AY Y One-Way 550.00 (CHF) E
RNN0S9FZ AY R One-Way 569.00 (CHF) B
YNN0S9FZ AY Y One-Way 594.00 (CHF) E
DNN0S9CZ AY D One-Way 618.00 (CHF) B
DNN0S9FZ AY D One-Way 705.00 (CHF) B
CNN0S9CZ AY C One-Way 781.00 (CHF) B
CNN0S9FZ AY C One-Way 868.00 (CHF) B
JNN0S9CZ AY J One-Way 999.00 (CHF) B
JNN0S9FZ AY J One-Way 1086.00 (CHF) B

We can see the price points per selling class. The continuous pricing supposedly will introduce price points between each selling class. So when we will see Z9 in EF, we actually won't know if they are selling 9 seats at the cheapest Z class price point or if they will cap them. Of course we will never know.

Apparently BA has been doing this for a few years already. For example ZRH-LHR in O class:

Results from https://www.ExpertFlyer.com
Code:
Fare Information Search:

Departing ZRH on 01/17/23 for LHR
Flying BA   on booking class O
Viewing in currency CHF
Show Fares for All Travel Dates

Fare Basis  Airline  Booking  Trip Type   Fare           Cabin  Effective  Expiration  Min/Max  Advanced
                     Class                                      Date       Date        Stay     Purchase Req
OZ0HO       BA       O        One-Way     33.00 (CHF)    E                                      
OZ0CO       BA       O        One-Way     42.00 (CHF)    E                                      
OZ0H        BA       O        Round-Trip  51.00 (CHF)    E                                      
OV2CO       BA       O        One-Way     54.00 (CHF)    E                                      
OV2HO       BA       O        One-Way     56.00 (CHF)    E                                      
OM0V2H      BA       O        Round-Trip  76.00 (CHF)    E                             SU / --  
OV2COMR     BA       O        One-Way     79.00 (CHF)    E                                      
OZ0C        BA       O        Round-Trip  84.00 (CHF)    E                                      
OV2H        BA       O        Round-Trip  86.00 (CHF)    E                                      
OV2C        BA       O        Round-Trip  108.00 (CHF)   E                                      
OV2OMR      BA       O        One-Way     114.00 (CHF)   E                                      
OV2CMR      BA       O        Round-Trip  157.00 (CHF)   E                                      
OV2HMR      BA       O        Round-Trip  166.00 (CHF)   E                             SU / --  
OV2HMR      BA       O        Round-Trip  202.00 (CHF)   E
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Old Jan 17, 2023, 8:38 am
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Originally Posted by OH-LGG
I have seen very good pricing in recent history
Yeah, I'm sure!
I guess it depends on where to ... Not so much to Japan, SIN or Australia, right?
But feel free to ping me when you can disprove me!
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Old Jan 17, 2023, 8:59 am
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If NDC is unfamiliar to you as it was to me then here is a good video summarizing it:
I think continuous pricing to both selling ancillary services much more often and easier, as well as stop selling through GDSes as was the tradition.
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Old Jan 17, 2023, 9:27 am
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There is a thread in the UA subforum about continuous pricing: https://www.flyertalk.com/forum/unit...ing-pilot.html
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Old Jan 17, 2023, 10:10 am
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This is a good summary document by IATA explaining the idea.

https://www.iata.org/contentassets/0...c-bundling.pdf

Airlines claim its a win-win for both, allowing them flexibility to sell you the ticket at a more competitive offering that the market is currently demanding as opposed to forcing you into the next higher bucket if a lower one isn't available.

As an example (since I don't know AY's fare buckets Ill only use Y and B, but at least at UA it only appears they're applying it to discounted fare buckets and not "full fare", though I guess they theoretically could offer it on full fare buckets if they want to).

Y fare filing exists for $800. B fare filing exists for $600. The flight is Y3 B0. Traditionally your only option would be to buy the Y fare for $800. With continuous pricing the system can offer you a B fare for anywhere between $600 and $800 even though the B fare is sold out. So you might get a ticket for $650 under this system when under traditional pricing system you would be paying $800 with that inventory allocation..

Of course the question that begs to be asked and we won't know the answers (but can assume it is likely): are the airlines reducing the number of "traditional" B fares they are allowing on a flight by doing this? So instead if they didn't have continuous pricing would the flight actually have been Y3 B1 instead of B0? On some routes, probably, on other routes, probably not. But we don't know as a whole how the implementation of continuous pricing changes their inventory allocation practices. Presumably on some routes the airline is coming out ahead, and on others the consumer comes out ahead, but it allows the price to be more flexible/adaptive to the market instead of being constrained to discrete fare buckets.
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Old Jan 17, 2023, 10:29 am
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Originally Posted by Lux Flyer
This is a good summary document by IATA explaining the idea.

https://www.iata.org/contentassets/0...c-bundling.pdf

Airlines claim its a win-win for both, allowing them flexibility to sell you the ticket at a more competitive offering that the market is currently demanding as opposed to forcing you into the next higher bucket if a lower one isn't available.

As an example (since I don't know AY's fare buckets Ill only use Y and B, but at least at UA it only appears they're applying it to discounted fare buckets and not "full fare", though I guess they theoretically could offer it on full fare buckets if they want to).

Y fare filing exists for $800. B fare filing exists for $600. The flight is Y3 B0. Traditionally your only option would be to buy the Y fare for $800. With continuous pricing the system can offer you a B fare for anywhere between $600 and $800 even though the B fare is sold out. So you might get a ticket for $650 under this system when under traditional pricing system you would be paying $800 with that inventory allocation..

Of course the question that begs to be asked and we won't know the answers (but can assume it is likely): are the airlines reducing the number of "traditional" B fares they are allowing on a flight by doing this? So instead if they didn't have continuous pricing would the flight actually have been Y3 B1 instead of B0? On some routes, probably, on other routes, probably not. But we don't know as a whole how the implementation of continuous pricing changes their inventory allocation practices. Presumably on some routes the airline is coming out ahead, and on others the consumer comes out ahead, but it allows the price to be more flexible/adaptive to the market instead of being constrained to discrete fare buckets.
Under no circumstances was this program allowed to proceed without clear models showing increased revenue overall, at the expense of the consumer.
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Old Jan 17, 2023, 10:44 am
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Originally Posted by Ghoulish
Under no circumstances was this program allowed to proceed without clear models showing increased revenue overall, at the expense of the consumer.
Yes, I guess overall consumers will lose, though it is not a given (if continuous pricing improves yield factors - but if it is an IATA initiative, I guess it must have been designed with consent from the entire industry and hence no yield factor improvements factored in). The question is whether this is beneficial for certain patterns of flying or booking, savvy vs. uninformed customers etc.
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Old Jan 17, 2023, 10:56 am
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Isn't continuous pricing how it should have been done always. Just back in the dsys legacy IT systems didn't allow it, but that limitation is long gone.

I guess the airlines wouldn't be implementing the change if they wouldn't have a business case for it. Anyhow the competition on the market hasn't disappeared, so also AY needs to take that into account when setting prices.
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Old Jan 17, 2023, 11:40 am
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One effect is probably that changing a fully "no-fee" flexible ticket in the future will 100% result in fare difference being collected.

They went from a pricey full fare flex ticket (that could be changed without any penalty to any departure) to the intermediate state where changes of full fare flex tickets was only free of charge if seats where available in the same bucket.
My prediction is that with at continous pricing, by definition there will never be availability in the sold bucket, as every ticket will more or less have a unique price. So any change will always be repriced on this "continous spectrum" of pricing. Effectively killing of the last shread of flexibility they had in their ticket types.
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Old Jan 17, 2023, 11:50 am
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Originally Posted by r2d2
Isn't continuous pricing how it should have been done always. Just back in the dsys legacy IT systems didn't allow it, but that limitation is long gone.

I guess the airlines wouldn't be implementing the change if they wouldn't have a business case for it. Anyhow the competition on the market hasn't disappeared, so also AY needs to take that into account when setting prices.
I am no master at pricing, but generally I'd say there is no use for an infinite number of pricepoints. Did you ever recieve a call from a Telemarkter, telling you can now have eg Helsingin Sanomat at 19,73% discount?
Why not 20%? you say, and he replies that he just sold one subscription at 20% and thus the pricing changed to 19,73% discount. And that this system is much better than offering fixed discounts, because what if he had only had the choice of offering you 15% once the 20% was sold out?


But this continous pricing makes somewhat sense in relation to the insanely steep prices Finnair has configured their upper buckets. When a intra-EU J seat goes from 600€ to 1200€ in one swoop, I guess a discounted intermediate step at say 900€ is cheaper. But again, this is because they first decided to stretch the pricing, so that highest bucket is maybe priced at 100x the lowest bucket. Then of course they need more buckets than there are letters in the system.
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Old Jan 17, 2023, 11:53 am
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Originally Posted by intuition
One effect is probably that changing a fully "no-fee" flexible ticket in the future will 100% result in fare difference being collected.

They went from a pricey full fare flex ticket (that could be changed without any penalty to any departure) to the intermediate state where changes of full fare flex tickets was only free of charge if seats where available in the same bucket.
My prediction is that with at continous pricing, by definition there will never be availability in the sold bucket, as every ticket will more or less have a unique price. So any change will always be repriced on this "continous spectrum" of pricing. Effectively killing of the last shread of flexibility they had in their ticket types.
As long as they keep fare class bands, like other airlines who do this, I suspect things will remain more or less the same on this. Unless AY really wants to release a less competitive ticket product
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