Knowledge Base

My Knowledge Base provides a centralized, collaborative information resource, and a sampling of the content I have created for my revenue management training and consulting.
If you would like to comment, make suggestions, or ask questions about the documents, send me a note on the Questions - Discussion page.

DEMAND

Passenger Travel Demand

Passenger travel demand is a critical factor that influences the planning and operations of rail operators, stations, and other stakeholders in the passenger transportation industry. This article explores how seasonal patterns, holidays, special events, scheduling and relatively fixed capacity, and competition impact passenger demand. By understanding these factors, we can gain insights into the dynamics of passenger travel and make informed decisions to meet the needs of travelers.

Passenger RM Demand Forecast Monitoring

Demand forecasting is a critical component of passenger revenue management. By accurately forecasting demand, airlines can optimize their pricing, capacity, and inventory allocation strategies to maximize revenue.

Control Charts

Statistical process control for measuring forecast accuracy, from DATAtab.

PRICING

Booking Class Assignment

Passenger carriers employ a multi-faceted approach when assigning fare products and seat inventory to booking classes.

Variable Pricing

The passenger transportation industry is a complex and dynamic one, and pricing is a key factor in the success of any operator. They use various pricing strategies to maximize revenue and fill their seats.

Continuous and Contextual Pricing

In all direct channels, "Continuous Pricing" overcomes the limitations of traditional pricing by providing a broader range of price options, enabling passenger carriers to better align with customer preferences.

Value-based Pricing (VBP)

Adopting VBP entails a thorough understanding of how buyers value a company's offerings. It requires measuring or estimating buyers' willingness to pay and analyzing how they use price as a decision-making factor.

Price Elasticity of Demand Calculation

Revenue Integrity: A Comprehensive Overview

Revenue integrity is a critical function in the passenger transportation industry, encompassing a wide range of activities aimed at ensuring that all revenue generated is accurately captured, recorded, and reported. It plays a vital role in safeguarding the financial health and sustainability of passenger transportation companies.

Leveraging Revenue Accounting Analysis

Effective revenue management relies on robust revenue accounting analytics. Well-integrated business intelligence systems that share information ensure accurate decision-making and prevent costly errors.

INVENTORY

Serial Nesting, Seat Protections, Authorized Selling Levels and Availability Calculations

The objective of nesting is to ensure that a lower-valued class in the nested hierarchy is not available for sale when a higher-valued class is closed for sale. In this model, you can play with capacity, overbooking, seat protections and bookings to see the results.

Inventory Control

In the competitive passenger transportation industry, optimizing seat allocations is essential for maximizing revenue considering customer journeys. This article explores seat allocation control based on different nestings of booking classes, and more in-depth with serial nesting. We also look at managing seat allocations and availability for departure legs, segments, and origin-destinations.

Passenger Seat Spoilage Management

In the passenger transportation industry, unsold seats on a departure represent lost revenue opportunities. This is referred to as spoilage, and it can occur due to no-shows and pre-departure cancellations. To mitigate this, some passenger carriers employ overbooking strategies. Overbooking involves selling more seats than are available on a flight, anticipating a certain percentage of passengers will not show up.

SCHEDULE and CAPACITY

Schedule and Capacity Management

The departure schedule is a carrier's core product, determining where and when passengers will be transported and the equipment capacity and types assigned to routes. Customers' purchasing decisions are primarily influenced by the schedule, including routes, days of operation, departure times, and connections offered.

Scheduling Processes

Initial design, operationalization, management, and distribution.

PERFORMANCE

Reporting Data Elements

Data reporting and analysis requires well defined data elements with a proper understanding of how they fit on a report.

Commercial Objectives and Key Results (OKR)

Plan, Base and Actuals, with absolute and percentage variances.

Building a Rolling Forecast

I like how Danielle Stein Fairhurst of Plum Solutions demonstrates building a rolling forecast, including dynamic formulas and dynamic seasonal linear trends (using FORECAST functions). Danielle also shares her spreadsheet file to download for your own use here below.

Rolling Commercial Objectives

A rolling forecast is a management tool that enables organizations to engage in continuous planning (forecasting) over a specified time frame. Unlike the traditional approach of creating a static annual forecast that only generates new forecasts near the end of the year, a rolling forecast re-forecasts the next twelve months at the conclusion of each month or quarter.

Rolling Forecast Spreadsheet

This rolling forecast spreadsheet is looking at costs, but you could use the template to look at capacity, traffic and revenues, with yield and RASK calculated.

Performance and Progress toward Objectives

Evaluating an organization's performance and progress is crucial for its success. Two widely used concepts for doing so are OKRs (Objectives and Key Results) and KPIs (Key Performance Indicators). Let's explore their differences and when each is most appropriate.

Competitive Intelligence

In today's fast-paced and highly competitive passenger transportation sector, companies must constantly remain vigilant to maintain competitiveness and market share. One key aspect of achieving this is through effective competitive intelligence (CI).

Testing Revenue Management Strategies

A test is not a test unless there is a clearly defined plan to measure the results. This plan must include a way to analyze data free of bias. If you don’t have a plan to measure the results, you’re just shooting in the dark.

Looker Studio Dashboards

Looker Studio is a no-cost tool that turns your data into informative, easy to read, easy to share, and fully customizable dashboards and reports.

Example Dashboard

One of my dashboards.

LOYALTY and BRANDED CREDIT CARDS

How do Loyalty Programs Benefit Retailing?

Loyalty programs play a crucial role in the passenger transportation industry's retailing strategy, benefiting both carriers and passengers in several ways.

How can a Branded Credit Card Benefit Retailing?

A branded credit card can provide several benefits to retailing, benefiting both the carrier and its customers.

DISTRIBUTION

Role of Product and Price Distribution in Passenger Transportation

Product and price distribution play a vital role in the success of passenger transportation companies. The goal of product and price distribution is to ensure that the right products and services are available to customers at the right time, in the right place, and at the right price.

GROUPS

Group Travel

Group travel involves the movement of multiple people together as a group. This article provides an overview of the concept of group travel, including an exploration of the different types of group travel, characteristics of group travel, and considerations related to the evaluation of group travel requests.

RETAILING

How Could Retailing apply to Group Travel?

Retailing can be adapted to cater to group travel by offering specialized services and incentives that are tailored to the needs and preferences of larger groups.

A la carte and Ancillary Categories

Traveling is a common occurrence for people. However, not all passenger carriers offer the same comfort level, facilities, and services. This variation leads to dissatisfaction among travelers and offers carriers an opportunity to improve their customer's overall travel experience. One concept that passenger carriers have introduced to enhance their customer's journey are a-la-carte products and services.

Commission-based Products and Services

Airline retailing can encompass a wide range of commission-based products and services that can enhance the customer experience and boost ancillary revenue for airlines.

A Closer Look at Retailing in Passenger Transportation

To bring the retail vision to life, the passenger transportation industry must collectively readjust its people, organizations, processes, technology, standards, and data management practices. This transformation requires modernized capabilities, skill sets, and close collaboration among stakeholders.

Retail Transformation in the Passenger Transportation Industry

The passenger transportation industry faces several challenges: figuring out what customers value, communicating brand value, enhancing the customer journey, and setting the right prices for added services.

Airline Order Management

The fundamental objective of the ONE Order initiative is to extend the PNR by consolidating a passenger’s personal information and purchases such as an airline ticket and ancillaries within a single record. The single customer order holds all data elements related to a trip.

Travel Subscriptions

Caravelo provides travel subscription solutions that increase revenue and market share, reduce seasonality, and create better customer experiences.

Travel Payments

As consultant, content creator and speaker, Paul van Alfen closely follows the complex ecosystem of (B2C & B2B) travel payments, demystifying it with the help his infographics and blogs. With 20 years of hands-on experience, combined with his holistic and agnostic view, he’s uniquely positioned to assess trends and to challenge payment and vertical strategies across the travel payments value chain.

Travel Payments Infographics

Up in the Air’s contribution to creating awareness in the wider community about the complexities and trends in Airline & Travel Fintech.

Product Definition and Lifecycle Management

The Product Management capability should enable the introduction of new products and services or modify existing ones across all sales channels. This includes the creation of new product lines, the addition of new features to existing products, and the discontinuation of products that are no longer in demand. Product Management should also allow for the creation of an extensible and configurable Product Catalogue.

Fare Product Catalogue

This spreadsheet displays an example of fare product information in economy for flights from YYZ to YVR. It includes details about different airlines (AC, TS, WS), cabin classes, branded fares, booking classes, and fare basis codes. The table also lists the fare levels, economic value ranges, effective dates and expiration dates, advance purchase requirements, and any applicable season or holiday restrictions. Additionally, it outlines branded fare attributes: change and refund policies, seat selection options, checked and carry-on bag allowances, food, and frequent flyer point accrual rates. Fare levels are not necessarily correct, but just for example. Of interest would be differentials between the branded products and the next higher booking class in each brand.

Departure Control Systems and Retailing

While retailing and DCS serve different purposes, they can complement each other to provide a more seamless and customer-centric travel experience. By integrating retailing capabilities into DCS, passenger carriers can offer personalized check-in options, tailored boarding passes, and real-time departure updates to their passengers. This can reduce wait times, improve operational efficiency, and enhance overall customer satisfaction.

PARTNERSHIPS

Airline Partnerships

Interline, Code-share, Alliances and Joint-Ventures

Calculating the Interline Proration Factor

Scenario: A passenger flies from New York (JFK) to London (LHR) on an interline itinerary involving Airline A and Airline B. The total fare is $1,000, with taxes and fees of $200.

Intermodal Passenger Transportation and Virtual Interlining

Intermodal passenger transportation is a rapidly growing sector of the transportation industry. It offers a number of advantages over traditional point-to-point transportation, including increased connectivity, sustainability, cost-effectiveness, and convenience.

The Airbnb Dilemma: Privacy, Ethics, and the Shift Back to Hotels

In a world where your weekend getaway could come with hidden cameras and sneaky hosts, and concerns have been raised about the potential long-term impact on the rental housing market in major cities worldwide, choosing between Airbnb and traditional hotels is an important decision.

THE CUSTOMER

The Customer's Journey

The customer's journey with an airline typically goes through several stages, from inspiration to post-trip follow-up.

The Customer's Expectations

Customer expectations of retailing have evolved over the years, and passenger carriers are constantly adapting to meet these changing demands.

Customer Communication and Transparency

How do passenger carriers communicate with their customers for service issues?
Are there platforms a carrier can subscribe to where they own the channel, not using social media?

Customer Points of Contact in the Travel Experience

Within the past few years, passenger carriers have come to realize that there are abundant opportunities to engage with travelers at touch points throughout the travel-planning and booking process to engender additional brand loyalty and generate incremental revenue via ancillary services.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) represents the total revenue a carrier can expect to generate from a customer throughout their entire relationship. Measuring CLV allows carriers to evaluate the long-term impact of their retailing efforts, particularly regarding customer retention and repeat business.

Customer Segmentation

Customer segmentation is a crucial aspect of passenger revenue management, which involves dividing customers into distinct groups based on shared characteristics and behaviors. This approach allows carriers to tailor their pricing strategies, marketing campaigns, and service offerings to meet the specific needs and preferences of each segment.

STRATEGIES, POLICIES and PROCESSES

The Importance of Market Knowledge

Market knowledge is crucial for a revenue analyst to successfully manage their market. They are responsible for optimizing revenue by departure on assigned routes through analysis and forecasting of passenger demand. To do this effectively, they must have a deep understanding of the market, including demand patterns, competitive forces, and corporate and market strategies.

New Market Strategy Checklist

A new market strategy checklist is beneficial for passenger carriers as it assists them in identifying and evaluating the potential of a new market. It guides the development of a detailed plan for market entry, addressing key factors such as regulatory requirements and customer demand. The checklist enables tracking of progress and measuring results, allowing for necessary strategy adjustments. By considering all aspects of a new market strategy, including market research and product development, carriers can enhance their chances of success in the new market.

Revenue Management Tasks and Priorities

Tasks and their priorities are the major activities and the order that a Revenue management team should carry them out. The following is an example of some activities that are critical to the analysis and evaluation of performance, opportunities, risks, and to the maintenance of the revenue management system.

Maximizing Revenue Through Effective Business Policies and Processes

Revenue management prioritizes maximizing returns from available selling opportunities, aiming for optimality rather than specific targets. Therefore, it's crucial to have policies and processes that assess the effectiveness of revenue management programs relative to potential revenue enhancement opportunities, rather than solely evaluating performance based on generated revenue.

Business Process Modeling

The use of a business process modeling tool is highly critical and essential to an organization. By far, the most important issues for an organization are increasing efficiency, reducing costs, and improving process effectiveness, as well as standardizing and harmonizing business processes. These issues can be resolved by modeling processes using a business process modeling tool.

Discipline and Systematic Practices

Ironically, true freedom, excellence, and happiness remain unattainable in the absence of discipline. It provides the bedrock upon which personal and organizational growth can flourish. Discipline serves as the cornerstone of a four-stage journey toward this transformative growth.

SYSTEMS

Main Components, Inputs and Outputs of a RM System

Business or System Requirements

Business or system requirements are about creating structured representations of business activities, used to communicate how a new or existing business process should work. Business requirements are often a precursor to changing an existing RM system, and often set the context for business process modeling and requirements analysis.

Criteria for the Success of RM System Implementation

Why do some companies have successful revenue management programmes, while other companies struggle with theirs? Why do some companies invest significant resources (time, manpower and money) in installing and implementing a revenue management system, but then fail to get much value from it, while other companies use the same system and obtain extraordinary benefits?

A Business Case for Revenue Management

The CRM-RM Partnership

By understanding customers' expectations and needs, carriers can tailor their products, services, and recommendations to better meet those needs. This approach is more likely to be well-received by customers, as they are only asked about their interests. Customers may also be more likely to ask the carrier for additional services during their travel.

Google Sites

Report abuse