Revenue Management Training – why now is the right time to invest

So far this year,  five European airlines have fallen (Malev, Spanair, Cirrus, air Alps, Czech connect). Oil prices are once again reaching levels above $125 a barrel ,  and the economic outlook in Europe is distinctly gloomy.

While airlines can’t do much about European macro-economics , it can do some simple things to improve its competitive position and the utilisation of its systems.  One thing they can target is ensuring that they are getting as much out of their RM(Revenue Management) systems as possible.

Over the past number of years, airlines have become dependent on RM software providers for RM training.  While this allows staff to understand how the system works and what the potential of the system is, vendors  don’t necessarily have the time or space to tailor the tools to the commercial needs of  organisations on an ongoing basis.

A 2009 survey submitted for the Journal of Revenue and Pricing showed that many airlines are not fully satisfied with vendor training . The response to the survey showed that the average satisfaction was 3.31 (out of 5), though the most common level of response  was 2!  It is clear that there is a need for a new perspective on RM training that mixes the theory of RM ,with a practical commercial sensibility.

Leveraging our experience with airlines , hotels, car parks and transport companies across the world, we can assist your organisation in introducing Best Practice Revenue Management and in building a world-class team of revenue analysts. Our view is that RM needn’t be complicated but if applied correctly, can wield a very high return on investment.

Our consultants can help to :Increase the commercial awareness of analysts, increase the standardisation of performance, improve the quality and speed of decision-making, provide insights into the changes that are occurring in the competitive marketplace, improve the communication between the analysts and the executive and ultimately deliver tangible revenue improvements.

Please contact us for more information.

References:

http://www.ingentaconnect.com/content/pal/rpm/2009/00000008/00000004/art00005

http://archive.ite.journal.informs.org/Vol4No1/Phillips/

http://www.npr.org/blogs/money/2011/12/16/143765367/why-airlines-keep-going-bankrupt

Finnair and their Social Media Strategy

Finnairs’ marketing department  undoubtedly have fun in creating their social media content.

What they have managed to achieve is to revitalise a relatively dull, dreary image of a traditional full service Legacy Carrier into something interesting, engaging and altogether modern. This has exposed them to  a whole new market, generated millions of dollars worth of free PR and put it at the leading edge of airline branding.

And how did they  succeed? 

By connecting their brand with something that their customers were interested in
By being topical
By being relevant
Having  a simple and well executed idea
Creating a sense of fun
A memorable experience
By using all available touch-points to engage with their customers

The Angry Birds Campaign

In Sep 2011,  Finnair Flight 81 from Helsinki to Singapore was adorned with special Angry Birds decals along the fuselage and engines. The crew , the airport were all branded with Angry Bird paraphenalia. Passengers were even served  angry bird cupcakes.  Passengers were invited to compete in the world’s first ever in-flight Angry Birds tournament. With the co-branding of Samsung Galaxy and Roxio, six passengers vied for the title of Angry Birds Asian Challenge Champion, with Finn,  Jani Uljas, ultimately taking the title.

The Surprise Dance Campaign

In Jan 2012, on flight AY201 to New Delhi,  its crew did a  ’Surprise Bollywood Dance’ on India Republic Day.  It recognised India’s sense of identity, its love of dance, its hospitality and that ordinary Indians appreciate  foreigners enjoyment of its culture.

So far, the youtube video has attracted more than 4 million views.

References

http://blogs.finnair.com/2012/01/26/take-off-to-bollywood/

http://arunrajagopal.com/2012/01/31/finnairsocialmediacontentstrateg/

http://aeroblogger.com/2012/01/26/india-republic-day-dance-finnair/

http://www.nycaviation.com/2011/09/angry-birds-take-over-finnair-flight/

http://marketingshylock.blogspot.com/2012/01/surprise-dance-on-finnair-flight-to.html

Ryanair and Wizz Air rush to fill the gap in Budapest

The collapse of Malev had  looked somewhat inevitable for quite sometime. The airline had been suffering from a financial crisis for the past few years: it became dependent on Govt Loans, the economy in its home market was in trouble, and its dominant position was being steadily eroded by low cost competitors. Furthermore, following an EU ruling in Jan ’12, it was ordered to repay Govt loans of over $US400million.

The formal statement from the CEO , Lorant Limburger read as follows: “Until the latter days there were prospects to continue operation and the trust of our passengers is unbroken, our partners lost their trust due to the information published in the last days and they started to ask for payment of their services in advance.  This speeded up the cash outflow and the situation of the airline became untenable. It is also known that the owner, despite the best intentions, is unable to provide additional financial resources to operate after the EU decision.  Considering all these the Board decided to order the cease of operation of the Hungary’s National Airline. We apologise to all of our passengers”.

The carrier had flown 329 flights to 42 destinations on a weekly basis and some carriers must have rubbed their hands with glee at the prospect of entering the market. So far, AirBerlin has announced a daily flight between Berlin and Budapest, while Aegean is launching Athens to Budapest from Mar 9th. Air France ,Germanwings , and  BA  have also added more frequencies on their existing routes. Lufthansa have added in more new routes too, but it is  Wizz ,easyJet and Ryanair who will be the greatest beneficiaries of  Malevs fall from grace.

Wizz Air already had an 12% share of available seat capacity and was already the Number 2 airline at the Budapest Liszt Ferenc Airport. It plans to base an additional two aircraft at the airport  and double its weekly frequency (from 67 to 129) .

easyJet  is the second largest  LCC in Hungary with a 3% capacity share . easyJet already operates six routes to Budapest, three of which are to London and Paris. They are likely to expand their offering shortly.

Ryanair   is set to start operations from the 17th Feb from Budapest Liszt Ference. They will start with four 737-800′s and they plan to roll out new routes on a phased basis between Feb and April. They are in final negotiations with the airport over costs, facilities and handling arrangements. The primary new routes will link up their existing bases at BCN, BGY, DUB, STN etc but they have the flexibility and the muscle to open up new routes wherever they see opportunities.

This week, both Ryanair and Wizz Air have  launched a recruitment drive to capture some of the 200 Malev pilots. Ryanair is likely to prove a better option for some of the 200 ex-Malev pilots as FR fly Boeings whereas Wizz fly Airbuses.

The battle for low-cost-carrier dominance in Budapest is only beginning.