Consumer behaviour is the key to optimising and growing airline revenue

Umit Cholak

Vice President, Revenue Optimization, Airlines Solutions, Amadeus IT Group

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Airlines face no shortage of challenges and opportunities when it comes to optimising total revenue. These challenges include correct inventory control across all distribution channels, product differentiation, personalisation, and realising the full benefits of existing partnership agreements. Low cost carrier pricing practices combined with the increased visibility of travel options, price empowered travellers, and increased price-based competition have caused airlines to rethink revenue management.

umit cholak vice president revenue optimization airline it solutions amadeus it group


I had the pleasure of speaking recently with airline customers from around the world about how they can take advantage of these opportunities at the Amadeus Airline Revenue Optimisation Forum 2016 in Cannes. As I explained at the forum, Amadeus is ideally situated to support the end-to-end airline revenue optimisation needs of today and tomorrow. Our technology is built on Altea PSS-Inventory, a future proof open system that allows real-time data exchange and practically unlimited scalability.

TheAmadeus Altéa Revenue Managementsuite uses big data from customer purchasing behaviour, competitor pricing, and rich contextual data. Since our technology fully integrates into ourAltéa Passenger Service Systeminformation is no longer distorted or inaccurate. This gives airlines better visibility of different parts of a big puzzle so they can identify and correct weaknesses. This includes not only revenue management but also product definition, inventory, distribution, and pricing, a unique feature that only we offer.

Accurate data combined with superior algorithms and usability enable revenue analysts to improve accuracy and precision in forecasting. This helps airlines achieve higher optimisation in origin and destination management and maximise revenues. Two great success stories that I talked about at the forum included the adoption of our revenue optimisation technology byScandinavian Airlines’ (SAS)to counter the ‘buy-down effect’ generated from traditional revenue management practices, andSingapore Airlines, who wanted to future-proof its revenue optimization capabilities: Origin and destination revenue management, cloud-based availability, and dynamic pricing.

Of particular interest at the forum, was how we have also taken airline network planning and scheduling algorithms to the next level. We’ve integrated Amadeus Revenue Optimisation modules byteaming up with Optym. This unique approach will help airlines optimise their schedules using market-demand forecasts, price sensitivity and passenger choice models, amongst other parameters, with their revenue management system.

All of this innovation requires substantial investment and qualified resources, which we’ve backed up with an over 5,000-person strong research and development team, and an investment of more than €4 billion between 2004 and the end of 2015.

Overall, it was a fantastic event, and I especially enjoyed hearing from our airline customers on a wide variety of topics, ranging from their adoption of ourcloud availability technologyand thebenefits of fare familiesto combining revenue management with merchandising.