In the last several decades, airlines have expanded their networks and their passenger reach by partnering with other airlines. Either through Interline or Code share agreements, this has allowed airlines to have a larger customer base while simultaneously improving the passenger experience by connecting between different airlines, making travel around the world easier. However, have airlines maximized the revenue that could be generated from these new passengers? Here we explore three ways to do so.
Maximizing Revenue through Forecasting and Optimization
Because of these interline and codeshare agreements, the routes that passengers can take can become more complex. Therefore, it is important for the revenue management system to forecast demand at the origin and destination (O&D) level based upon the connections. Furthermore, these O&Ds should include not just one own airline’s segments (online O&Ds), but also the segments of these partners (trip O&Ds). In this manner, the forecasting that is powering the revenue management system can consider the full, true flow of the passengers throughout the combined networks. PROS Revenue Management (RM) System does just that. The more partners an airline has, the more complicated the network, which drives more need for O&D (particularly trip O&D) forecasting. Through O&D forecasting and optimization, our customers have seen upwards of 1% revenue gains, allowing them to maximize their networks, including components associated with interline and codeshare partners.
Maximize Revenue through Cascading
Another way an airline can maximize their potential revenue from interline and code share partners is through cascading. The operating carrier is responsible for providing the availability on their flight segments, even if it is marketed by a different carrier via codeshare. Without cascading, this availability tends to be static and dated, which could lead to a partner selling seats on an airline’s flights for less money than an airline may want, thus reducing revenue. Cascading allows the different partner airlines to query each other for live availability. Therefore, this process is dynamic and real-time, and ensures the most accurate availability possible, minimizing any potential revenue losses. At PROS we have a solution for this; it’s called Real-Time Partner Availability (RTPA) and it is an add-on to our availability and dynamic pricing engine PROS Real-time Dynamic Pricing (RTDP). Airlines all over the whole world have begun using this functionality to better serve their customers and maximize their revenues from their code share agreements.
Mitigating Risk with Technology
Lastly, the added complexity of an airline’s network based upon their interline and code share agreements can lead to more opportunities for abuse. Travel agents can try to manipulate itinerary-building processes, combining different airline segments looking for the cheapest price, just to cancel unwanted segments later on. This exploits the network connectivity which is trying to make it easier for passengers to make those connections. Systems that can monitor and address certain abuse situations can certainly help reduce and minimize these activities. At PROS, PROS RTDP has a set of abuse and monitoring features designed to prevent abuse and to inform the airline of potential cases for which they can take action.
Taken together, these functions can help an airline manage the risks created by a robust network from interline and code share partnerships.
The Path Forward
Overall, airlines will continue to grow and expand their partnerships. This is better for airlines and customers alike. But as these networks grow in size and complexity, it is important for airlines to continue to monitor them and try to maximize the revenue opportunities that they can provide. Advanced smart technology, like that of PROS, can optimize revenue and profits in the ways described here…and more.
If you are interested in learning more about the products and features described here, please reach out a PROS representative.