How to Build a Culture of Experimentation: LATAM Airlines Share Tips for Getting Started

The innovation imperative in airlines

Airline leaders know that innovation is essential. Razor-thin margins, market volatility, and intense competition make changes risky. To unlock the potential of initiatives such as continuous or dynamic pricing, fare families / upsell, and stand–alone ancillaries (and more) without the pitfalls, you need a systematic way of identifying what works and what doesn’t. You also need to do it at scale. Advanced experimentation does exactly that.

Leading by experimentation

LATAM Airlines exemplifies a carrier that’s embraced the benefits of experimentation. By relying on data over opinions, they overcome biases, challenge assumptions, and avoid costly missteps.

The airline kicked off its experimentation journey within the pricing and revenue management (PRM) function, pinpointing the tactics that drive RASK (Revenue per Available Seat Kilometres), load factor, and ancillary revenue. They then scale successful initiatives and phase out the unsuccessful ones, ensuring continuous improvement and growth.

LATAM Airlines has not stopped there. They are implementing an organisation-wide experimentation programme that extends across the organisation, where anyone can run tests with the right tools and support.

The benefits of a culture of experimentation

This approach delivers clear benefits:

• Democratises innovation by empowering every team member to generate and test ideas

• Acceleratestime to market by rapidly testing and validating initiatives before full-scale implementation

• Manages risk by rolling back suboptimal initiatives and prioritising the most beneficial ones

• Creates value through increased revenue, customer satisfaction, and loyalty

• Encourages collaboration by breaking down silos and enabling cross-functional learning

Expert insights: getting started with experimentation

We asked Eduardo Kerchner (Advanced Analytics Manager) and Felipe Bahamonde (Experimentation Lead) from the Analytics team at LATAM Airlines to share their tips for getting started with experimentation.

Watch and learn insights from the industry front-runners below.

Experimentation gives airline leaders a proven way to balance innovation with risk. They can pilot new initiatives and precisely measure impact, scaling and optimising winning strategies and quickly roll back sub-optimal ones, with confidence.It is the ideal innovation partner for PRM where it helps teams unlock opportunities of Modern Airline Retailing where the returns from dynamic pricing, capacity optimisation and offer engines are appealing but not rigorously tested. If you are interested in learning more, check out our video case studyon How LATAM Airlines embraced business experimentation for revenue management.

For further reading on advanced experimentation, we recommend:

• Thomke, S. H. (2020). Experimentation Works: The Surprising Power of Business Experiments. Harvard Business Review Press, and

• Kohavi, R., Tang, D., & Xu, Y. (2020). Trustworthy Online Controlled Experiments. Cambridge University Press.

Continue the conversation

If you’d like to learn more about building an organisation-wide experimentation programme, our experts, Vladimir Antsiborand Joël Gastelaars, are here to help. Reach out to discover how we can support your journey.