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CAAS: Technology Report: “Innovating in the Space”: PROS Explain Benefits of Price Optimisation and Quoting Tech

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caas

May 31, 2017

By Tom Willis

PROS, a ‘cloud software company powering the shift to modern commerce”  states that they are the “only company with a solution portfolio that improves top-and-bottom-line financial results simultaneously, applying a holistic approach to business performance that creates a material and measurable business impact.”  Air cargo is now one of their sharpest focuses. CAAS spoke to them during the CNS Partnership in Florida recently about how their Price Optimisation (PO) and quoting technology is raising awareness of the benefits to airlines and their customers.

Zeke Ziliak, Global Director of Transportation & Travel has dedicated 12 years so far to the air cargo industry, stating that “ever since I joined PROS, I’ve been working with all of our air cargo carriers as well as our freight companies as well – transport and logistics. We have a number of carriers as well as the world’s largest trucking company.” He explains that for the last 30 years, PROS has “provided optimisation solutions in origin destination networks that started off in the passenger world” with Southwest Airlines being their first customer. He further relates, “the revenue management technology gives airlines the ability to open fare classes, make seats available at the right time to the right passengers with an objective of maximising the revenue. It’s a sophisticated problem where you have to forecast demand and you have to know what capacity you have as well.” He remarks that the company ultimately is “continuing to refine that science.”

Business to Business (B2B) model industries are one of their largest cornerstones now and of this, Ziliak remarks that “on B2B aspects, we provide price optimisation. We do also provide the revenue management on the cargo side, but the thing is it’s just not the right solution for the industry in the case that we find ourselves in now with an abundance of capacity. Relative to the demand, growth and capacity continue to outstrip [it].” Specifically, Ziliak points to belly capacity as increasing.

 In cargo, he the director states that “[the] most valuable is our price optimisation and our quoting technology.” He explains how it works: “maybe there’s a sales person for an air cargo carrier or a GSA and they need to sell the capacity, what PROS does is provide a band of prices that statistically will maximise the likelihood of winning that transaction.” He suggests that it allows a great confidence in a sales person that they will win that deal but not by “spoiling any network contribution for the airlines. You’re not leaving any money on the table.” That’s what the pricing side compromises.

On the quoting side, PROS aims at providing a quote for businesses that is going to be the best for their customer, a freight forwarder or shipper for example, which can be on a mobile platform or an e-commerce platform. How does it work exactly? Ziliak notes, “it’s algorithmic, that’s one of the main tenets we find of modern commerce. In order to be an ongoing concern in the B2B world, you have to have algorithmic, dynamic, real-time pricing that your customers easily can access whether through e-commerce or mobile channels.” Ziliak further explains that, “PROS Price Optimizer can be used by both the air cargo carriers and they of course would be using it with their customers – the freight forwarders – then the forwarders can be using it to best serve their customers. The best prices in real-time,” ultimately.

Regarding the back-end of that software, Ziliak says that “we have a team of 30 plus PHD’s who focus their time on determining these algorithms that maximise the potential of winning deals. However, we are a software product company so when we deploy a configuration of our software for an air carrier or a cargo carrier, it will be specifically configured for that carrier and we deploy machine learning – it learns throughout time as markets change and prices ebb and flow.” It can also take into consideration what the weather is going to be and the fuel burn rate, for example.

Ziliak notes that the software “benefits anyone who uses it,” but the industry is still partly unaware of its positives. Ziliak demonstrates that, “if you talk to airlines, every one of them would nod its head when you would say ‘revenue management,’ but when you say price optimisation you might get a quizzical look… but it’s still gaining adoption out there.”

Ziliak concludes that PROS want to create “innovation in the space,” so that the industry stays competitive. PROS attempt at “evangelising the art of the possible,” is a tagline that underpins its philosophy of achieving potential for the airlines in transporting cargo. The company currently hold a 97 percent renewal rate with customers, still work with their first ever three customers and look at providing a “perfect blend of simplicity and data science.”

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