Most airlines today have rules-based, tactical pricing tools to monitor competitor airfares for changes and implement their responses. The Strategic Fare Optimizer (SFO) is a new decision support tool from Sabre Consulting that helps airlines proactively adjust airfare price levels to help improve revenue. The SFO uses economic methods including price elasticity, optimization models and game theory to help airlines adjust their airfares in-line with estimated changes in market share and sales volumes. The SFO is also useful for seasonal decisions on airfare pricing in conjunction with revenue and sales budgeting targets.
SFO also helps airline pricing analysts review fares and sales from prior seasons. This type of “hindsight optimization” is another way airlines can maximize revenue performance within certain business constraints. Analysts can then use these optimized historical prices to make better-informed decisions about potential price improvements for the upcoming season. The estimated revenue improvement report includes details on the new fare levels and sales volumes by fare product. To help mitigate any risks of making a proactive price change, estimated revenue outcomes take into account a wide range of potential competitor responses.