3rd August, 2021
Revenue Management (RM) and loyalty executives working for an airline must gain better understanding of each other’s functioning and also jointly look at the expectations of a traveller vis-à-vis what they offer (for instance, short-haul vs. long-haul) in order to deliver better results.
In a pre-event online session that kicked off this year’s Mega Event 2021 Asia-Pacific conference, RM expert Oliver Ranson answered several questions posed by Mark Ross-Smith, Status Match – what should the departments know about each other, how can the loyalty department gain more seats and when not to assign seats for “miles” and rather sell via other mechanisms, the significance of data etc.
Ranson explained that RM executives focus on aspects like pricing, evaluate willingness to pay along with assortment optimization and inventory management. All three aspects of RM intersect with loyalty in certain ways,” he said. Loyalty looks at the entire CLV and RM executives generally don’t look at it in their assortment optimization. Loyalty data can also contribute a lot in RM-related decision-making. From an organization’s perspective, do consider – Technology revenue (coming from the loyalty product and tends to come without operating of flights) vs. non-technology revenue and their impact in the financial market must be delved into.
On how to gain more seats for “miles”, Ranson recommended:
- Loyalty executives must speak to the right person in the RM department (pricing and demand forecasting team, and not essentially the systems-approach), explained Ranson. “Speaking to someone from the systems team comes later,” he said.
- Be familiar with the data used by RM executives and train your case for more seats, miles accordingly (for example, advance booking data; historical data; overbookings, cancellations and refunds).
Ranson highlighted that teams must look at – which part of the experience air flyers value the most? For instance, evaluate cases where one can go beyond the “seat”? Look at the duration of the flight, and think like a traveller. Evaluate the “emotions” involved, and look at RM and loyalty more effectively, rather than just looking at the spreadsheet!
By Ritesh Gupta
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