Unlocking hidden revenue streams with market models

Airlines face a formidable pricing challenge: each day they transport tens of thousands of passengers across hundreds of flights, often with multi-connection itineraries, and must price each journey against hundreds of variables including demand, season, time of day, current events, global markets, and competitor actions. This process must continually adapt to a changing world.

Generative AI-powered market models are emerging to handle this complexity in real time. These deep learning models, trained on high-resolution numerical data, are designed to analyze, simulate, and predict complex financial dynamics. Instead of relying on historical trends or static rules, the model acts as an AI 'brain,' consolidating diverse data to simulate different market environments and make dynamic commercial decisions such as pricing, inventory, or revenue management.

Virgin Atlantic is already using such a model to drive generative pricing engines in some markets. Dominic Kennedy, senior vice president of revenue management, sales, and e-commerce, says the model considers real-time inputs like demand, capacity, and booking, and evaluates the airline's positioning relative to competitors and broader market conditions with a sophisticated approach to understanding demand manifestation.