Retooling revenue management for the entire organization

by | Mar 1, 2022 | Airlines, News, Travel Tech

Retooling revenue management for the entire organization

Over the past two years, uncertainty has become the new normal for airlines. This has made the lives of revenue management analysts and their commercial partners especially hard as the majority of pricing decisions and forecasts are based on historical purchasing patterns.

So how can airlines move forward and focus on driving revenue to pull themselves out of the effects of the pandemic?

The obvious answer is by pursuing anything that can restore top-line growth. One of the smartest ways for airlines to do this is by investing in their products and operations to help them be more competitive in the marketplace. Revenue management (RM) systems, such as the one developed by FLYR Labs, help airlines maximize revenue opportunities and support their business growth.

Business areas that can benefit from retooling revenue management

Network, channel sales strategy, and marketing are among the top three business areas that can also benefit from retooling revenue management.

The network planning and scheduling group builds an airline’s product. Revenue management is the gatekeeper to this network, setting the market fare for access onto flights. They are also one of the first teams to see where a network strategy is succeeding or falling apart and can relay insights back to the network team in order to make the airline’s product stronger.

This insight into forward-looking revenue trends can also be used by marketing and sales strategy teams to influence the right moments to move inventory and volume or when to hold back during times of organic demand.

Do your current RM tools need an upgrade?

Many airlines invest in revenue management as a core competency and see it as key to their success. However, the range of tools available at present depends on the resources of the airline. For example, smaller airlines tend to buy an off-the-shelf product, while larger operators build their own tools and systems. Within these tools, the Revenue Management System (RMS) creates demand forecasts and price optimizations, and the analysts interact with demand and post-processing to arrive at the optimal price for their network.

As the pandemic has shown, there are weaknesses in the majority of existing revenue management solutions. Many have been built so that operators are steering their airlines using strictly historical data. Similarly, other airline groups remain heavily dependent on historical data such as the network planning teams who typically look at last year’s profitability to create next year’s schedule. Although

helpful to look at historical bookings and pricing to predict future pricing, this methodology leads to a lack of reactivity. It only works well when the coming year looks similar to the last 12 months.

In the brave new world in which we now live, predictability is no longer the norm. There is now a growing appetite for change, spurred on by the recent volatility in the market and an eagerness to look at other possible ways to approach the revenue maximization problem.

Improving reaction speeds with the latest RM solutions

The Revenue Operating System® by FLYR applies the latest AI innovations to maximize revenue, deliver measurable results, and add clarity to revenue decisions. Importantly, it differs from traditional revenue management tools in that it delivers much-improved reactivity to the volatility found in today’s marketplace. It can capture the sparks of demand that pop up but aren’t always obvious, applying analyst-grade intuition and decision making and applying it to every flight, every day, throughout the entirety of the network.

The Cirrus platform is built to serve airlines of all sizes and operating models and does not limit startup, low-cost, or network carriers from enjoying the benefits of solution capabilities, as they currently reside with other legacy systems. In fact, The Revenue Operating System offers a configuration specifically designed for the smaller or startup segment of the airline industry.

In addition to revenue maximizing pricing strategies, Cirrus also natively produces load factor and revenue predictions (both common KPIs across commercial airline functions). These metrics can be easily and quickly understood and communicated in order to bolster collaboration and empower data-driving decision making across the organization. This is an improvement compared to most native revenue management solutions whose primary model outputs are only abstract metrics or concepts such as unconstrained demand.

In recent years there have been many buzzwords thrown around between revenue management practitioners in this industry, such as NDC, total revenue optimization, and continuous pricing. However, the market is beginning to see airlines test cases that adopt these advancements in technology. With the introduction of The Revenue Operating System, airlines not only have a solution that offers backwards compatibility into their current legacy processes, but also one that has been built to optimize future technological opportunities – a world where airlines can create more personalized, real-time offers that provide the right product and right price to each customer.

If the past two years have taught the industry anything, it is that flexibility and reacting to change is essential to returning to top-line growth. Revenue management will continue to play an important part in creating competitive advantage, and, as can be seen with Cirrus, the future of revenue management is already here.


Kyle Holden, Head of User/Flight Analytics at FLYR

For more information about FLYR Labs and how we use advanced and intuitive technology to understand context and help airlines achieve their ultimate revenue potential, contact us today