the magnificent world of the airlines

The Magnificent World of the Airlines

About the Author

Vitaly Sekunov

• 8 years in Airline Industry

• Business Analyst

• Project Manager

• Product Owner

• VBA + SQL Developer

Evolution of Ticket Prices

In the past: elite customers paying a lot

Low Cost Airlines vs Legacy Airlines

How much is Actually “a Lot”?

68$ => 575$ according to today’s rate (* 8.5)

Low Cost Airlines vs Legacy Airlines

Now: the situation is changing

Price

Year

Legacy

Low costs

How do You Buy a Ticket?

I would Like to Travel to …

Booking is created

Airline Systems

“Prices on the Website are Never Real!”

Booking is created

Airline Systems

Cached prices

Airline Systems

Reservation System

It is a system that contains all information about the passengers travelling with a given airline.

Global Distribution System

An airline distributing via Global Distribution System allows every travel agent in the world to sell its tickets.

Can Travel Agents Sell Cheaper than

an Airline Website?

Inventory System

Booking Class is a bucket that contains different fares.

Y

S

M

B

…

2

4

3

1

…

SeatsBooking Class

500€

450€

400€

350€

Inventory indicates how many seats in each Booking Class are available for sale.

Who Optimizes that?

What is Revenue Management?

Revenue Management is all about selling the right seat to the right customer at the right time for the right price via the right channel.

Revenue Management System

Historical data analysis Demand forecast

Optimization

Maximized revenue Human decisionsOptimization

Revenue Management Systems: Leg vs Origin & Destination

VS

Leg based system:Optimize the traffic on one street of the city

Origin & Destination system:

Optimizes the traffic of the whole city

When to Buy a Ticket?

Demand Segmentation

Different categories of customers are coming in at different points in time

Each Revenue Manager keeps in mind:

• Don’t sell too early!

• Don’t sell too late!

• Departed free seat cannot be re-utilized!

price

days before departure60-30

Importance of Connecting Passengers

10

12

10140

Total number of seats: 172

Additional Products

Blind Bookings

Betting for an Upgrade

Hack the Price, Anyone?

Human Factor Errors

from www.airnguru.com

Can Airline Employees

Fly for Free?

Overbooking

What is Overbooking?

Overbooking is the practice of selling more tickets than there are seats.

Why does Overbooking Exist?

It is not banned by most of the governments (except Russia, for example)

In Europe ~4-5% of passengers do not show up at the gate

Revenue of passengers coming last minute > overbooking compensation

Future of Overbookings

Discussions about the economics of overbookings restart again after the United fiasco

This very unfortunate incident costed them ~1 billion USD and counting

Thank You!