How can you effectively use third-party tools for airline revenue management?

1 Demand forecasting

One of the key challenges of airline revenue management is to accurately predict the demand for each flight segment and fare class. Demand forecasting helps you set the right prices, adjust your inventory, and plan your capacity. However, demand forecasting is not easy, especially in a volatile and uncertain market. You need to consider various factors, such as seasonality, events, customer behavior, booking patterns, and competitive actions. To help you with this task, you can use third-party tools that offer advanced demand forecasting models, based on historical and real-time data, artificial intelligence, and machine learning. These tools can help you generate accurate and reliable demand forecasts, identify trends and anomalies, and adjust your forecasts to changing scenarios.

2 Price optimization

Another crucial aspect of airline revenue management is to determine the optimal price for each seat on each flight. Price optimization helps you balance the trade-off between selling more seats at lower prices or fewer seats at higher prices. However, price optimization is not simple, either. You need to consider various factors, such as customer segmentation, price sensitivity, elasticity, willingness to pay, and competitive pricing. To help you with this task, you can use third-party tools that offer sophisticated price optimization algorithms, based on demand forecasting, revenue management objectives, pricing rules, and constraints. These tools can help you set the optimal prices for each fare class, update your prices dynamically, and monitor your price performance.

3 Inventory control

Another important aspect of airline revenue management is to control the inventory of seats on each flight. Inventory control helps you allocate the right number of seats to each fare class, based on the expected demand and price. However, inventory control is not straightforward, either. You need to consider various factors, such as booking curves, cancellation rates, overbooking policies, and seat availability. To help you with this task, you can use third-party tools that offer efficient inventory control methods, based on demand forecasting, price optimization, and inventory management rules. These tools can help you allocate your seats to maximize your revenue, manage your overbooking and spoilage risks, and optimize your seat availability.

4 Distribution management

Another essential aspect of airline revenue management is to manage the distribution of your seats on different channels and platforms. Distribution management helps you reach and attract more customers, increase your exposure and visibility, and reduce your distribution costs. However, distribution management is not simple, either. You need to consider various factors, such as channel preferences, commission rates, booking fees, and customer loyalty. To help you with this task, you can use third-party tools that offer effective distribution management solutions, based on distribution strategy, channel optimization, and customer relationship management. These tools can help you distribute your seats on multiple channels, such as direct, indirect, online, offline, and meta-search, optimize your channel mix and performance, and enhance your customer loyalty and retention.

5 Performance analysis

Another vital aspect of airline revenue management is to analyze the performance of your revenue management strategy and actions. Performance analysis helps you measure and evaluate your revenue and profitability, identify your strengths and weaknesses, and discover new opportunities and threats. However, performance analysis is not easy, either. You need to consider various metrics, such as revenue per available seat kilometer (RASK), load factor, yield, average fare, and market share. To help you with this task, you can use third-party tools that offer comprehensive performance analysis features, based on data visualization, reporting, and analytics. These tools can help you track and compare your revenue and profitability, benchmark your performance against your competitors and the market, and generate actionable insights and recommendations.

As you can see, there are many third-party tools that can help you improve your airline revenue management. By using these tools, you can enhance your decision-making, automate your workflows, and improve your performance. However, you should also be careful when choosing and using these tools. You should evaluate their features, benefits, costs, and compatibility with your existing systems and data. You should also monitor their results, validate their assumptions, and adjust their settings to suit your specific needs and goals. Ultimately, you should use these tools as a complement, not a substitute, for your own expertise and judgment.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?