“Show me the money!”
That’s what Jerry Maguire says to keep his Client in Cameron Crowe’s 1996 film starring Tom Cruise in which Jerry, a sports agent, is let go by his employer and finds his own way. It’s also an excellent mindset for those seeking successful airline careers.
Over the last 40 years, the airline industry CFOs have perfected the art of delivering lean and cost-conscious operations. Many of the best ideas have all been implemented over the decades, and today, finding new savings without harming the brand is difficult – it can take sizeable investments to deliver new cost savings for the airline. Fortunately for airlines and their CFOs – on the revenue side though there is low-hanging fruit for ”Show me the money!” mindset people to harvest.
Revenue vs Profitability
Many airline stakeholders are excellent at pumping the revenue pipeline – including Sales, e-Commerce, Marketing and Ancillary Revenue. But few hold profitability levers like Revenue Management (RM), which is often done behind closed doors and obscure to non-practitioners.
However, when Loyalty teams work closely with Revenue Management there is great potential to grow airline revenue and drive up profitability – at almost no cost. Qatar Airways enjoyed great success in the early days when the Loyalty Program – Privilege Club, worked closely with my team in RM. It was a winning combination – Loyalty’s marketing and data insights helped define the strategy and RM’s historical and other data helped Loyalty shape the direction for the program.
The Loyalty & Revenue Management Relationship – Supplying the Demand
RM allocates the right seat to the right passenger at the right time, altogether representing the right price. The fundamental role of RM is to assess demand for seats at different price points and optimise how many to sell at each fare, ensuring that seats which can be sold for more money tomorrow are not sold for less today.
Unlike Loyalty in most airlines, RM has the ability to look at the entire passenger landscape. RM will look at every passenger – including FFP members, alliance status holders and “infrequent” flyers who may be regulars with other airlines. These non-loyalty members, also known as shadow members/shadow passengers, are helpful as RM utilizes this data intelligence to generate a broader perspective on the airlines ‘passenger makeup’, compared to how other divisions in the airline use passenger data.
