Iberia Express reduces distribution costs by 75% with Airplane Solutions and Microsoft Azure services

High costs pose a problem for low-cost carrier

Iberia Express, owned by Iberia (Iberia LAE SA Operadora Unipersonal), was created in just six months to compete with other low-cost passenger carriers in the European market and started operating in 2012 from its parent airline’s hub. One of the carrier’s main objectives was to distribute traffic to the Iberia long-haul routes through Iberia’s domestic and European markets.

Iberia’s distribution provider contract came with very high pricing transaction costs. To fully deploy in such a short time, Iberia Express had inherited all the systems and processes from Iberia, including distribution agreements. This resulted in perfect synchronization between the companies but came with a high cost for Iberia Express when selling through its website, which didn’t make sense for the type of carrier it is.

Iberia Express needed commercial tools that would give it independence and generate traffic for the channel it managed. To achieve these objectives, a new website was set up, the Club Express members club was created, and a series of commercial actions were carried out. Iberia Express had some sales success with these initiatives, but the distribution cost bill began to grow too much, and this made it necessary to first focus on controlling it, then focus on reducing it.

A Microsoft partner with aeronautical expertise

The carrier requested help from Airplane Solutions, a Microsoft partner based in Barcelona, Spain. Airplane Solutions builds custom software solutions and collaborates with aeronautical and travel companies to improve their efficiency and cost margins. The company’s Air Pricing software-as-a-service suite, available in the Microsoft Azure Marketplace, provides quotes in real time for fares and ancillary services.

Iberia Express wanted Airplane Solutions to help the carrier optimize its distribution costs and develop a fare quote solution to substitute for previous providers. Airplane Solutions already had the backbone with Air Pricing.

To guarantee fast development cycles, Airplane Solutions instructed the pricing solution to present an easy-to-use interface where custom rules could be implemented while getting price data from Iberia Express’ internal files. Once the solution was established, Airplane Solutions started introducing industry-standard data providers.

Azure services bring blazing speed and impressive scale

Microsoft Azure contributed outstanding operational speed, enabling Air Pricing to return an average price response in less than 4.2 milliseconds. With Azure, Airplane Solutions was able to scale Air Pricing rapidly, expanding to 5x capacity in less than three minutes.

Altogether, Air Pricing uses Azure Functions, Azure Storage, Azure API Management, Azure DNS, Azure Cosmos DB, Azure Data Explorer, Azure Event Grid, and Azure Application Insights.

“The impressive operational speed and flexibility of Microsoft Azure gave our Air Pricing system elastic scalability,” said Agustín Hernández, COO at Airplane Solutions. “This enabled us to achieve an amazing cost improvement for Iberia Express.”

Distribution costs fall by 75 percent

Customization and implementation of the pricing solution took less than one year, and that included some of Iberia’s routes, to lend network consistency to the Iberia Express web.

“Airplane Solutions offers Air Pricing, a great solution that has helped us reduce 75 percent of our distribution costs,” said Juan Carlos Llorente, Head of eCommerce Development & Commercial Systems at Iberia Express. “They are a reliable software partner, very flexible and accommodating to all our business needs. They always provide great technological solutions.”

Now with a fast, efficient, flexible system for comprehensive pricing options and revenue strategy, Iberia Express has opportunities to develop new commercial and marketing solutions. One of those recently developed was custom web calendars, which offers clear value to customers without negatively impacting pricing transaction volume. Air Pricing feeds Google Flights and metasearch engines (also known as search aggregators) with Iberia Express pricing. This enables more than 20 million daily pricing transactions with no impact on Iberia Express’ costs.

In the decade following its formation, Iberia Express has grown noticeably, and it now serves as one of the five main operators out of Madrid Airport, thanks in no small part to the e-commerce platform Airplane Solutions built on Azure.