SAS take the lead in airline revenue management

Michael Rasmussen

Head of Revenue Management Competency Centre, Amadeus IT Group

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Scandinavian Airlines (SAS) are no strangers to pioneering new revenue management (RM) practices, having introduced RM on origin and destination level back in the early 90s. This enabled SAS to manage different revenue streams across the network, balancing the value of domestic travellers with the demand for international connections. SAS also went on to create a 'fenceless' model, which enabled the airline to segment travellers by business - midweek flights, and leisure - weekend flights.

airplane taking off

However, strong competition from LCCs- which as we know favour a model of simple, one-way fares - put pressure on SAS to review both their fare structure and cost base, in order to compete more effectively on domestic and international routes. After much deliberation, SAS decided to outsource revenue management to Amadeus and so a new partnership was created. This involved the permanent transfer of 25 SAS employees - including myself - to the Amadeus offices in Copenhagen, where I currently head up the revenue management competency centre. Amadeus gained over 400 man years of airline RM experience with this.

The SAS revenue management migration project kicked off in May 2013 and with my new Amadeus hat on, we set about building a revenue management solution that would improve upon the SAS in-house system, but would also take advantage of the full integration with Altéa. This migration represented a major project for Amadeus R&D teams.  Two years on, and after an initial test period of 'shadowing' both systems, SAS went live with Amadeus RM solution on 21st March and the outlook so far is very good. It’s worth mentioning that the original plan was to go live in June, but we were able to implement three months before the original planned date. This would have been impossible without the commitment from everyone in the team. We managed to achieve seamless coordination between SAS, Amadeus and former-SAS-transferred-to-Amadeus teams to succeed on a very complex project.

So what does this migration mean for Amadeus on a wider scale? It is clear that airlines all around the world are looking to embrace more sophisticated revenue management practices to capture additional passenger revenues. The availability of 'big data' is creating new opportunities for airlines to do just that and Amadeus is in a unique position to extract greater benefits from its extensive data and apply them on innovative RM techniques.