New Challenges in Revenue Management

These days airlines are challenged by a highly dynamic and competitive environment more than ever.
A systematic use of Revenue Management tactics and tools is a decisive means of extracting the maximum amount of revenue from a fixed quantity of seats and one which can often lead to a significant improvement in revenue. But today’s low-cost airlines are increasingly adopting a hybrid business model with additional types of sales and services which have one thing in common: these strategies result in a level of complexity that many airlines are barely able to cope with in terms of their systems in general but especially their Revenue Management.
Today revenue managers have to take code sharing agreements, charter contracts or (soft) allotments for tour operators into consideration when managing flights.

OUR SUPPORT

Together with your staff, we fully analyze your business and market environment. We support you in analyzing your historic data and projecting it onto future business on a proven qualitative and quantitative basis, covering such factors as

• General pricing- & fare setup
• General demand (as well as market segmentation)
• Cancellations / overbooking
• Group reservations / special demand
• Discount ticket allocation
• Analysis of external competition
• Analysis & adjustment of your schedule
• Marketing & sales activities (promotional sales, newsletter etc)

We also provide support in selecting the adequate Revenue Management / Forecasting tools based on our comprehensive knowledge of the common systems currently on the market.

OUR EXPERIENCE

We have many years of experience both working in and consulting on all kinds of Revenue Management tasks with a focus on airlines with a low-cost, charter or hybrid business model.

Our in-depth knowledge has been put into practice at several airlines including

• Introducing and establishing a revenue management department and system
• Managing the construction of a custom-made web-based revenue management system including definition and design of specifications, e.g.
• A seamless workflow between RMS and relevant reservation & distribution systems
• Integration of cost-related data that assigns direct operating costs to individual routes / flights
• Integration of market-related and competitive data, e.g. competitors’ fares
• Detailed reporting

Evolution of distribution 

Todays saturated markets mean there is much more to consider from an airline’s point of view in regards to a distribution conept. If you are to target all the market segments that suit your airline business, you will need to handle multiple distribution channels that meet the requirements of each segment. It goes without saying that this should be accompanied by a maximum reduction in distribution costs. All this points towards the implementation of a distribution system and process which emphasizes cost efficiency and is clearly focused on a cost benefit analysis.
Nevertheless implementing more distribution channels, such as GDS access, and building up a hybrid airline business model by addressing more market segments, such as selling charter (soft) allotments, includes the high risk of building more complexity than an airline can bear.

OUR SUPPORT

PROLOGIS will support you with analysis of your business and marketplace in detail and help you to come to the right decision concerning:

Evaluation of adequate reservation & distribution systems in terms of e.g.

• Reducing distribution costs
• Optimized & lean processes
• Flexibility & capability of handling extreme booking peaks (e.g. online special sales)
• System flexibility and availability to grow capacity together with airline growth

Evaluation of existing and possible future distribution channels with a detailed cost benefit analysis and testing, e.g.

• Costs- vs. additional turnover and proportions of lost vs. gained demand in case of
  
  • Distribution will be focused on one channel (e.g. internet)
  • Possible introduction of different fares per distribution channel
• Introduction of more market segments to address (depending on network and business model)
  
  • Corporates (corporate booking website)
  • Agents (via web/GDS)
  • Tour operators / groups
  • Interlining & codesharing
    
    • Definition of processes to sell each other’s seats
    • Messaging / data transfer
    • Accounting / clearance
    • Liability (e.g. missed connecting flights)
  • e-Ticketing
  • Evaluation of cross-selling potential
    
    • Ancillary products
    • Special services
      
      • seat reservation
      • catering
      • baggage (sport etc)
      • loyalty program (how to handle with codeshare partner?)

Would you like to take off together with PROLOGIS expanding and optimizing your business model?

Do you have any questions or would you like more information?

We look forward to hearing from you!

Contact: Gerd Pontius