ATPCO says the deal could lead to next-generation airline retailing that customers want.
ATPCO, the company that powers most airfare pricing, has acquired a company that it says allows travel sellers to update prices in real-time and paves the way for an experience more like regular online shopping.
ATPCO tracks and publishes airfare pricing across the market, which is then used to set prices for more than 400 airlines and more than 120 distribution companies. ATPCO says its data powers prices for 90% of airfare searches. The board consists of executives from several major airlines, including United, Delta, Lufthansa, British, American, and more.
The motivation behind the deal aligns with industry’s goal of moving toward a “dynamic offer” model — through which pricing moves in sync with a constantly changing market and takes into account data from individual customers, according to Alex Zoghlin, president and CEO of ATPCO. More and better data also means that travel sellers can more easily offer bundles that include more than just flights.
“What we were realizing is they need more and more data, and they need it real time in order for this to work,” Zoghlin said.
Right now, ATPCO publishes data once per hour. The company 3Victors, which is joining ATPCO as a subsidiary, is built on technology that it says analyzes 12,000 airfare searches per second and can publish market prices real time.
“What 3Victors really brings to us is new datasets and advanced data science capabilities, including machine learning, that allows airlines to get access to real-time information so that when they’re creating a dynamic offer, they really have an understanding of what the market looks like at the time that they want to create an offer for a customer. And this is one of those foundational things that are critical for an airline to create the right offer,” Zoghlin said.
The Benefits of Real-Time Pricing
He said offering the proper offer to the right customer at the right time would lead to a higher conversion rate. ATPCO has a goal that 80% of airfare sales come from dynamic offers by 2026.
As more airlines and partners have been experimenting with new ways of selling products in a personalized way, there’s been even more data to deal with.
“Airlines fancy themselves to be Amazon or have similar type of tech as Amazon, and that’s going to take some pretty serious data science and AI technology,” said Rick Seaney, co-founder and chief innovation officer of 3Victors.
Zoghlin said bringing in 3Victors saves ATPCO up to two years of tech development work.
The startup in 2020 raised an undisclosed amount of venture capital from JetBlue and ARC (Airlines Reporting Corporation), as well as $3.5 million in debt financing, according a public filing.
Correction: This article has been updated to correct a source of ATPCO’s venture capital investment. It was ARC (Airlines Reporting Corporation).
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Photo credit: An executive from American Airlines is on the board of ATPCO. TJDarmstadt / Wikimedia Commons