The Evolution of Airline Revenue Management

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The airline industry is in the midst of an evolution, presenting new obstacles for carriers regardless of their geography, business model, and/or size. These obstacles encompass the familiar areas of increasing profits, evolving distribution models, interpreting volumes of unstructured data and the need to offer a more personalized customer experience. New distribution points have generated large volumes of data that hold valuable insights about airlines’ customers.

Airlines are now tasked with efficiently collecting, processing and analyzing this data and subsequently using it to sense and respond to shifting market dynamics. And customer demand for a seamless personalized travel experience continues to increase while airlines attempt to implement an integrated customer-centric business strategy that is aligned with revenue objectives.

To ensure future success, airlines need a fresh approach that focuses on revenue per customer rather than revenue per seat and provides the means to incorporate operational efficiencies into their business processes. In addition, it should encompass readily-accessible, real-time data that will improve retailing and customer-centricity strategies while overcoming competitive influences in the market place.

To accomplish this, airlines need to incorporate a next-generation revenue management solution that goes above and beyond just the management of seat revenue. Success in today’s industry requires a next-generation revenue-management solution that incorporates advanced technology that is robust and provides airlines with more accurate, real-time information in an easy-to-consume and interpret format. Additionally, it should provide performance enhancements for an airline and productivity improvements for its employees. Most importantly, it should lead to increased customer satisfaction by promoting a seamless passenger journey.

In essence, airlines must become better retailers. In doing so, they will begin to understand the principles and value of total revenue optimization (TRO). For airlines, all roads lead to total revenue optimization to help make sense of the jumble of revenue streams comprising non-seat revenue sources, including rapidly expanding codeshare and partnership arrangements and the sale of significant ancillary products.

TRO ensures revenue-management solutions consider the total value of each potential customer versus the value of the base fare. It provides a framework for airlines to face retailing challenges in today’s environment and embrace business processes and solutions to utilize new, more detailed, real-time sources of information.

By embracing a TRO approach to support ancillary revenue management alone, revenue gains between .05 – 1.0 percent can be realized by an airline, according to a 2016 Sabre Airlines Solutions benchmark analysis.

Want to learn more about Next-Generation Revenue Management and Sabre’s approach? Click here to register for Sabre’s Live Streaming Launch Event where we’ll talk to airline executives, industry experts, and showcase Sabre’s next-generation revenue management solution, Sabre Revenue Optimizer.