Page 93 - AAA JANUARY - FEBRUARY 2017 Online Magazine

COLUMN HAZEM HUSSEIN

Amadeus Altéa Revenue Management Suite
Discover the formula to maximise airline revenues

Decision support
& simulation tools
Make more informed decisions and leverage
D the full potential of our advanced system
O (hub)
– and hence fare families, which are groups
of fares with different sets of benefits or
D
O (hub)
restrictions, became common practice. And -
these days we all know them well: one fare
family might offer the lowest price, but no
refunds or changes permitted. Another might
offer flexibility for a higher price. Each fare
family could have multiple price points.
Fare families allowed airlines to react to
Amadeus
Availability
travellers’ demands for travel products that Data Centre Input processing Revenue management processing functions
functions
functions
Collect vast amounts of quality data Process big data and ensure information Improve forecasting with advanced Customise and execute real-time
from customer purchasing behaviour,
are simpler and easier to purchase. More competitor pricing and contextual data is not distorted thanks to full integration algorithms and superior usability to set the availability and sell decisions across
into Altéa Passenger Service System
all sales channels
optimal availability and pricing strategy
importantly, it was a means to compete
against LCCs.
With these changes, fare conditions
eased and fare structures moved from A Revolution in Revenue has made a real difference to airlines globally.
strictly fenced to fence-less. It also meant Management In Asia Pacific, EVA Air already uses the Altéa
that revenue management wasn’t focused on A complete redesign was needed for revenue Network Revenue Management system and
just the flight ticket anymore. Now it also had management to cope with these new fare Singapore Airlines recently signed for the same.
to account for meals, extra baggage, extra structures and more accurately calculate
legroom, and more. a traveller’s willingness to pay. A next- Looking Ahead
But airlines quickly realised that the generation system that addresses the new Beyond today’s challenges, airlines are
legacy revenue management systems of the ways that they shop and air products are sold. already looking to how they will address
1980s and ‘90s were simply not equipped to This need formed the basis of our tomorrow’s. Merchandising, cloud availability,
handle these changes, and revenues took a partnership with Scandinavian Airlines (SAS) dynamic pricing, advance codeshare and
hit as a result of the ‘spiral down effect’. in 2013. SAS are no strangers to pioneering partnerships, booking intelligence and more
Generally speaking, a customer will new revenue management practices, having are key factors to consider.
always choose to pay the lowest fare introduced revenue management on O&D With travellers demanding greater
available for the same, or similar, product. level back in the early 90s. personalisation, airlines will need to move
So in order to prevent customers who With them we have created a solution forward from just understanding travellers’
were willing to pay a premium from moving that is ‘customer’ rather than ‘seat’ centric, willingness to pay. They will need to determine
to a lower price point, airlines erected uniquely designed to counter the ‘spiral down’ the optimum price point and product offer
‘fences’ using rules like advance purchase effect and help airlines gain competitive for each traveller, presented in real-time,
or minimum stay requirements. Legacy advantage from new merchandising by harnessing loyalty profile information,
revenue management systems had relied practices. And voila, Altéa Network Revenue booking history, habits and individual needs,
on these fare fences being in place, but the Management was born. as well as external data sources.
introduction of fare families with simplified Altéa Network Revenue Management In an age where the traveller is
fare structures knocked many of these automatically estimates the willingness-to- empowered and every cent counts, revenue
fences down. And if not accounted for, this pay of passengers and takes into account the management is a critical focus for airlines,
could result in a revenue ‘spiral down’. This price sensitivity when optimising the fare and one which directly impacts their bottom
is caused when the system misdiagnoses family availability. It collects and packages line. Technology advances provide the
a drop in higher-yield booking classes and big data from customer purchasing behaviour, opportunity to turn network complexity into
responds by assigning more low-fare seats competitor pricing and contextual data, and sustainable revenue opportunity, now and in
to drive bookings, thereby exacerbating with full integration into Altéa Passenger the future.
the high fare bookings drop. This is the Service System, which means information is
single biggest revenue leakage for network not distorted or inaccurate. (Hazem Hussein is Executive Vice President,
airlines today. Fast forward to today, and the solution Airline Commercial, Amadeus Asia Pacific)
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