Airlines get the most from their income streams through the use of revenue management systems. Ashley Wakeland, head of marketing at FLYR Labs, gives some insider insights to Bernie Baldwin.
An airline seat is a valuable commodity, especially given all the extra money an airline can accrue from selling other services once that seat is sold. None of that extra income is achieved however, if the seat is not sold, so carriers must do its utmost to ensure a purchase.
It often goes unappreciated that airline inventory is a perishable commodity, so not only do seats need to be sold, the revenue from them needs to maximised at every opportunity. That means revenue management, which in its simplest form lowers the price if the seat seems unlikely to be sold, but increases it when demand is strong.
Nowadays, of course, the practice of revenue management is a very long way from that basic premise. Complex IT systems enabling the push for sales to target right down to the individual.
FLYR Labs is aiming to take revenue management even further with its Cirrus Revenue Operating System, which the company describes as a ‘software platform [which] represents a departure from decades-old methods that have become the brittle foundation of revenue management’.
Ashley Wakeland, head of marketing at FLYR Labs, explains the properties the application offers that can give airlines an advantage as they strive to get the most from their revenue streams.
“At FLYR, we’re helping airlines unify all commercial data under a single repository and data model. This automates the more routine pricing decisions the analyst makes, and allows them to spend more time performing strategic tasks like implementing optimal pricing strategies, automating manual processes, and performing analysis, leveraging the software to influence broader commercial decisions such as proactive marketing or network strategies,” she comments.
Enhancing data
Much of the data used in current revenue management (RM) systems and that used in FLYR’s is similar, but the difference comes from how the company uses its data compared with how the competitors use it.
As might be expected in an industry sector that is developing at a rapid rate, additional functional elements are required regularly in order to remain competitive, never mind trying to maintain a leading position.
“FLYR is always adding new features to its solution, as frequently as every two weeks, to ensure customers always have the latest advantages,” Wakeland reports. “Additionally, over the past year, we’ve strategically acquired advanced technology companies, providing our customers with a clean-sheet and vertically integrated platform.”
This strategy is exemplified by FLYR Labs’ acquisition in September 2022 of Pribas, an ‘end-to-end offer, order, and inventory management, and retailing solution’. According to FLYR, the move ‘…enables airlines and other travel operators to control their distribution strategy, delivering products and services across critical direct channels using next-generation inventory and order management capabilities. With Pribas, airlines can reduce their dependence on legacy distribution systems, accelerate their time to market for new products, and capture market share without intermediaries’.
A week after announcing the Pribas deal, FLYR revealed that it had bought Pace Revenue, a provider of revenue optimisation and commercial decision intelligence for hotel and lodging companies, thus extending FLYR’s Revenue Operating System to hotels.
Whether via acquisition or through in-house developments, Wakeland is enthusiastic about the constant addition of features to FLYR’s armoury.
“The invention of new business and commercial models is helping airlines catch up with their technologically advanced peers in other industries, improving revenue performance, operational efficiencies, and better customer experiences,” she declares.
One of the modern practices in revenue management is dynamic pricing which enables airlines to vary prices in real time depending on market demand. The method takes into account many factors, including time of day, stage of the booking process, demand levels as well as prices being offered by competitors.
Enhancing outcomes
Wakeland elaborates on the areas of income that benefit from such practices. “Dynamic pricing powered by deep learning is the key to creating optimal offers and empathetic customer experiences for airlines,” she asserts.
“As part of FLYR’s total revenue optimisation ecosystem, commercial teams are able to automate pricing decisions in real-time, optimise total revenue including ancillaries and create personalised offers optimising customer conversions and lifetime value. They can also create trusted load forecasts to optimise capacity plans, direct marketing spend and energy towards high yielding returns, and confidently sell cargo capacity earlier”.
Wakeland’s mention of ancillary revenues underlines the weight that is put upon the selling of the seat. Without that, there would be no ancillary sales of course. With the expectation that a seat will be sold, ancillary sales can be factored into revenue management and therefore also the pricing strategy, as Wakeland notes.
“Ancillaries are key drivers of profit for airlines, and are foundational to FLYR’s technology solution,” the head of marketing confirms.
“For ancillaries and fare families, it is important to dynamically set the price to match travellers’ preferences and increase conversion rates. And, it is just as important to know the customer’s willingness to pay for a bundle with ancillaries, versus a standalone fare to create the optimal and dynamic pricing that takes advantage of macroeconomic buying and selling principals.
“With FLYR, airlines can set the ancillary and fare family prices dynamically and make pricing decisions based on total offer optimisation, resulting in strong revenue strategies that optimise total revenue performance,” Wakeland emphasises.
Thus, from the commodity of a simple airline seat, through smart revenue management to total offer optimisation, airlines can not only deliver for themselves, but for the traveller too.
Author Bernie Baldwin
Published 3rd November 2022
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