The post-Covid "back-to-normal" era is proving to be anything but "normal" for airline revenue management (RM) teams. Talent is scarce and under pressure due to extreme demand fluctuations, persistent capacity challenges, and a competitive landscape as fierce as ever. RM analysts are racing to achieve more with less, and they are in dire need of data-backed confidence in their decisions.
In this blog post, we will explore a thorough list of key capabilities that your revenue management (RM) system must provide you with to successfully steer revenue operations, ensuring peace of mind for the RM team.
Continue reading for tips on how your RM experts can prevent revenue loss through better forecasting and optimization controls.
Leverage the power of forecasting
Forecasting enables analysts to predict future demand for a limited resource: available seats. Its accuracy is critical, so airlines optimize inventory accordingly to maximize revenue and avoid revenue spillage. This is especially important in today’s uncertain markets where demand is volatile, travel patterns change constantly, and airline schedules are always evolving.
The forecasting capabilities below, delivered by PROS RM solutions, can help RM analysts strategize for their markets with visibility and trust in the data. And, they are what puts PROS forecasting lightyears ahead of the competition.
- Forecast not only by seats sold on departed flights but also for future flights
Being able to see forecasts based not only on historical data but considering booking for future flights helps analysts identify and capture new trends in passenger behavior. This gives more visibility into what’s driving demand for a specific market and confidence that RM teams are not missing an emerging revenue opportunity.
- Update forecast by using the entire booking window
This is another capability that allows analysts to ensure new trends are captured early in the booking window and taken into account for strategies in later parts of the booking window. Within PROS RM technology airlines have the flexibility to configure the effect and how much learning from different parts of the booking window is shared which gives them control over what data is reflected in the forecast.
- Forecast by time of day, not flight number
With current capacity restraints, constant schedule changes are the status quo. That’s where a forecast by time of day, instead of flight number comes useful, as it allows RM analysts to look at a robust forecast that is not affected by schedule changes and ensures the forecaster captures passenger behavior on when travelers want to fly.
- Consider time-weight in forecasting
Markets change constantly, and RM analysts need confidence that their forecasts reflect the latest trends in passenger behavior. PROS forecaster has a configuration that controls how quickly it reacts to bookings deviating from expected. This allows it to better capture market conditions and trends, as more recent observations do have a higher consideration in forecasting. For RM analysts this means more reliability in the forecasts generated.
- Consider impact of holidays and special events on forecasting
Holidays and special events have a significant impact on regular demand. Those occasions move around, so evaluating separately their impact means having a separate forecast for them. This allows RM analysts to have a higher degree of certainty, while at the same time not neglect seasonality and volume changes.
- Benefit from automation of seasonality
Together with the Bayesian forecasting methodology (read all about it here), automation is the DNA of PROS RM solutions. It allows RM analysts to avoid redundant manual tasks and save time to focus on the more important revenue-generating tasks. With PROS, RM analysts do not need to manually manage seasonality, which allows them to focus on where demand exceptions are instead, such as holidays, special events or other changes, and strategize to monetize on them.
Gain agility with optimization controls
As markets become more and more competitive, and demand more unpredictable, it becomes even harder for RM analysts to find the right formula between pricing, seat allocation, and inventory management to maximize revenue.
The optimization capabilities below, delivered by PROS RM solutions, can help arm RM analysts with the necessary tools and techniques to determine optimal pricing strategies for each single flight with confidence. These capabilities ensure optimal results and are why PROS system is superior.
- Authorization levels (AUs) are generated from bid prices
In the optimization process, PROS RM utilizes Dynamic Programming methodology to calculate bid prices. This approach is provably optimal and does not assume low value demand will materialize before high value demand. So, even airlines not using bid prices can get the most optimal AUs given the optimal bid price controls on a flight.
- Bid prices are dynamic
The benefit of dynamic bid prices for RM analysts is that all possible scenarios of accepting or rejecting bookings are considered at any given point prior to departure. This helps ensure that no opportunities are missed, and revenue is maximized for every flight.
- Occurrence of auto-optimization is not manually triggered
RM teams using PROS RM technology rely on a never-ending optimization process. All flights are optimized every day, but a variety of input triggers can optimize for changes observed during the day, so analysts can constantly adjust to market dynamics.
- Demand adjustment is dynamic
To reflect the latest market observations, any intraday adjustments to demand are used in optimization. This learning makes optimizations more accurate as they are based on latest expected demand and bookings.
- Configuration optimizations for cabins
In order to maximize revenue, RM analysts always benefit from additional flexibility. The support for multiple cabins and different configuration options, such as moveable curtains, and upgrades helps RM teams manage configuration optimizations more effectively in less time and with less efforts.
- Adjusting optimizable capacity by considering decrement and no-shows values
Another helpful optimization tool that gives RM teams more agility are overbooking recommendations. With PROS overbooking accounts for additional revenue that can be obtained through cancellations and the possibility for no-shows.
- Overbooking rules
With PROS RM technology the level of overbooking is flexible, which is not the case for less sophisticated systems. PROS system can be configured across the whole network or set up differently on different flights based on passenger show-up behavior. Analysts are able to then manage the show-up forecasts just as they can demand forecasts, which helps them manage flights more efficiently.
Achieving success in revenue management can be a challenge for RM teams, as they face the pressure of market dynamics and competition. However, when equipped with reliable forecasting and optimization capabilities presented in user-friendly workflows, RM teams can have confidence that the system is bolstering their decision-making. This is where PROS Revenue Management solutions truly shine.
To learn more about PROS RM solutions or schedule a demo, contact us email@example.com.