Download - 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!