Tuesday, December 24, 2013

Real-Time Revenue Management

One of the things that we have been hearing a lot about lately is the ability for real-time optimization of a single departure or a group of departures.  This has many benefits for those departures that tend to get a significant number of bookings in the last few hours prior to departure – especially in the cargo and passenger rail industries.  The objectives of real-time revenue management are two-fold:
n  React with minimal latency to dynamically changing market conditions.
n  Especially useful when significant booking activity/schedule changes occur during the day and carriers cannot afford to wait for nightly file updates and processing
RTS is currently reviewing many options on how best to approach real-time revenue management.  One approach is:
n  The inventory control system senses change in booking activity and sends alerts to the revenue management application based on user defined thresholds, i.e., cancellations, bookings greater than projected demand, etc.
n  The revenue management application gets the latest booking, cancellation, schedule change data in real time from the central reservations system (inventory refresh) and automatically optimizes these departures and sends updated allocation levels back to the reservation system.
n  Two-way real time interface between the central reservation system and the revenue management application would need to be developed to facilitate dynamic data exchange between the systems.
The pros to implementing real-time revenue management consist of:
n  Boosts the bottom line by making optimal decisions based on real time information minimizing lost revenue opportunities.
n  Improves analyst productivity by reducing rework on a number of stale or invalid controls.
n  Automatically identifies departures that need to be re-optimized and eliminates the need for the analyst to continuously monitor changes in market conditions.
The downside of implementing the above is:
n  May not be worth the investment if market behavior is relatively stable and predictable
n  If thresholds are not defined accurately, it may lead to uncontrollable number of alerts being sent from the Central Reservation System to the revenue management application impacting performance.
We believe that the ultimate approach would be a combination of nightly processing and the ability for the system to send alerts so that the analyst can actively review those departures that are falling outside of the user defined threshold parameters.
RTS values your input and thoughts and the enhancements to our products.  Leave a comment and let us know your thoughts.
From all of us at RTS we want to wish you a very Merry Christmas and a Joyous New Year. 
Robert L. Harris, Jr.
Senior Solutions Consultant

Wednesday, December 11, 2013


It is the latest buzzword in the travel and transportation industry where passengers can travel between 2 major cities which are less than 1000 miles apart within 30 minutes, at a speed close to 800 mph. Another one of Elon Musk’s newest inventions and an extremely powerful, practical one which has become a jaw dropper in the Travel and Transportation industry.  Existing conventional modes of transportation of people consists of four unique types: rail, road, water, and air. These modes of transport tend to be either relatively slow (i.e., road and water), expensive (i.e., air), or a combination of relatively slow and expensive (i.e., rail). Hyperloop is a new mode of transport that seeks to change this paradigm by being both fast and inexpensive for people and goods. A mode of transport that is a cross between the concorde, a rail gun and an air hockey table.

When it will become a reality is yet to be seen, but for now the authors are calling this an “Open Source Project”. It has an open design concept just like Linux did decades ago and is now a reality. The first version of this design involves passenger and the second will be passenger and vehicle.

In lines with the Hyperloop, a more comprehensive project is the Aqua=Terra T.W.I.N.S. (Trans-Web Infrastructure Network System) projects (aquaterraplanetaryholdings.us and invention.net/aquaterra) that not only provide for an advanced transportation system, it also includes a complete self-sustaining format that links, via sub-surface Tubes, land (Terra) and sea (Aqua) Stations to form an international / single-standard web system.

 We at RTS, love to research and analyze any new trends that will help companies in this space integrate profit optimization and revenue management into their existing business processes and systems. Since we work with both Passenger and Cargo, it is very exciting to learn about the specs that the Hyperloop has presented to enable them to make use of our wide product range.

The Hyperloop concept is the first of its kind to ever to be created and there is no doubt that above a very sophisticated software system/s that handle the data, visuals, reservation, financial, reporting, there is an important layer of software which is a profit enhancement system that will that make sure there is benefit and optimized use of the seats/cargo space within the Hyperloop.

Some questions that will linger on for now on our minds - What is the capacity? If it cannot meet the demand will the prices go up? Is there is a long wait time to use the Hyperloop pods, will people find themselves having to take an alternate mode of transport?

The move toward higher speed, better service, cheaper travel, and something less environmentally polluting, is going to happen — it's the wave of the future.

Deeshi Gandhi
Technical Manager

Thursday, November 21, 2013

Ah - Blog Time Again!

Just what is a Blog? According to Wikipedia, it is “a discussion or informational site published on the World Wide Web and consisting of discrete entries ("posts") typically displayed in reverse chronological order”. It goes a little deeper in a subsequent paragraph to indicate “Many blogs provide commentary on a particular subject; others function as more personal online diaries; others function more as online brand advertising of a particular individual or company.” Since this is the Revenue Technology Services blog, this obviously fits quite nicely into the description of online brand advertising. However, the pertinent section here to my mind would be “commentary on a particular subject”.

Internally, we are all tasked on a rota system to come up with these blogs. After a few rounds, you would think that inspiration for new topics or ideas would be lacking. Yet it is surprising how this inspiration can typically come from nowhere. Personal blogs tend to range from the informative to the wild rant, but corporate blogs tend to focus more on the business itself. So as not to be too repetitive, when the baton is passed to me, I cast my eye back over previous blogs on our site. When doing so today, what I noticed was this: we have articles covering various aspects of our product line and functionality; we have articles discussing trends in technology; most importantly, we have a number of articles regarding our people.

In the many years I have been with RTS, our buzzline, catchphrase if you will, has always been “People, Processes, Technology”, and that is exactly the information we have been communicating. And communicating is the key. Through the entire implementation cycle, and into our ongoing client support activity, we stress communication.
  •         During initial project planning, communication is key to ensuring both we and the client are on the same page regarding expectations as to which people are assigned, what processes will be adjusted, and what technology will be implemented or affected.

  •        During implementation, communications become even more crucial. Among project team members, it keeps all appraised of the status, progress and potential hurdles. As part of change management, good, continuous communication from the outset keeps all stakeholders aligned regarding how the business will adjust to the new functionality.

  •          During education sessions we stress the importance of communications, and that the RM team cannot effectively operate in a vacuum. Methods of information sharing are identified, and suggestions made for keeping all aware of what is going on within RM.

  •          After go-live, we pride ourselves on maintaining communications with clients, allowing us to garner feedback, understand their business and changes for which we may be able to offer advice.

  •          Our annual user summits allow for further, interactive communication between ourselves and clients, but additionally between clients, and prove very beneficial.

Even the rare negative feedback is still positive communication, as it helps us improve our People, Processes or Technology.

And there we close the loop. A blog is communication in a short(ish) chunk. It allows us to communicate with you, the audience, on a regular basis, giving an insight into who we are and how we think. So, how about “communicating” with us, to let us have your thoughts and feedback on this or any of our other blogs, and make this a truly 360 degree experience.

Jason Codd
VP Services

Thursday, November 14, 2013

What exactly is in it for me? - Measuring the Value of a Revenue Management System

Every consumer wants to be reassured that their purchase is performing to the best of it’s ability and they are doing everything possible to maximize the utility of their investment.  Revenue Management departments at transportation companies globally are no exception to this. Though it is widely accepted in the airline and cruise ferry world that a Revenue Management System (RMS) can boost the top line, the challenge frequently encountered is in determining how significant these revenue benefits are.  So while the why and how Revenue Management can positively affect a company are taken for granted, by how much is a question that every Revenue Management manager spends many a sleepless night contemplating.   

Obviously, during the procurement process, an airline or cruise ferry will have to make the purchase based on empirical evidence and results reported by earlier adherent of RMS in order to justify their investment.  However each company has it’s own distinct operational and strategic objectives that impact revenue and so empirical results at other companies are understandably received with a bit of skepticism.  However, once an RMS has been deployed, companies have the opportunity to measure the value the system is providing. Savvy algorithms that strive to provide an indication of how much revenue opportunity has been realized through automation and optimization sciences are present in a number of sophisticated RM systems.  These models typically tend to simulate two scenarios – one with no or completely inoptimal revenue management – this reflects the worst case scenario. The second scenario is diametrically opposite to the first and is best case scenario that assumes that optimal revenue management principles have been employed. These models are typically run after the departure on historical data so the revenue minimization and maximization algorithms can be applied with the benefit of hindsight.  The third component used in these models is the easiest to compute as it is based on the actual observed results.  Using these statistics, supervisors get invaluable insight into the available revenue opportunity, the amount realized, and that unrealized due to various reasons including spoilage, dilution and overbooking.  Identifying and analyzing poorly performing departures along with associated causes can greatly help guide informed decisions on future departures as there exists the opportunity to learn from missteps of the past.

However, a word of caution is very much in order regarding these approaches to determine revenue performance.  As with any system, and especially in the case of a data intensive discipline like Revenue Management, the quality of the results is heavily dependent on the robustness and reliability of the input data. As the saying goes, Garbage in, Garbage out. So a great deal of care should be taken to ensure that the inputs are accurate and outliers are detected and ignored.  Supervisors should also be cognizant of some of the assumptions that these models make which may not totally reflect reality and also be wary that system recommendations may not be taking into account external factors that are invisible to the system. However, it is still possible to glean valuable inferences through intelligent analysis of the figures. It is also extremely important that the RM departments realize that the value of these exercises lies in learning from historical performance and any attempt to engage in a blame game where analysts are being targeted as reasons for less than satisfactory revenue performance in the past is not only unfair but obviously can be counter- productive.

How does your company quantify revenue benefits? Please share your experiences and thoughts with us.  If you require more insight into this process, please don’t hesitate to reach out to me at Pradeep.bandla@rtscorp.com. 

Pradeep Bandla
VP, Product Management and Marketing

Wednesday, November 6, 2013

Turn your customers into partners...

Partnership is one big mantra that I have learned over the years. It works everywhere.  It works at home. It works with my colleagues. And, of course it does magic with every customer I have worked together so far.  While developing and maintaining a partnership with customers is essential in every business, I find it to be lot more important and imperative when you provide innovative solutions, especially which involve analytical and scientific models. Practitioners and veterans in the industry oftentimes dismiss innovative solutions citing their longevity in terms of experience and expertise in that area of business and providing reasons such as lack of good data, uniqueness, and customer acceptance.  I have personally encountered these challenges when I first started working with experienced airline operations guys who have managed cargo capacities of flights for years.  Similar experience when I first worked with freight railroad operations planning folks who have worked on improving train performances. In both instances, developing partnerships at various levels tremendously helped me in gaining acceptance while successfully delivering innovative solutions.

Developing partnership with customers starts right from the time you make the first contact with the customer about how you can help the customer do things better and cheaper. It is about understanding their challenges and offering solutions that are mutually acceptable.  It is about being upfront and honest about what your capabilities are and only make the promises you can keep, be it functionality and quality of the solution, skill of the resources, time to implement, or after sales support.  It is a shared journey with compromises and tradeoffs to create a future for both you and your customer. It is about:  listening to your customers; involving them in your vision, strategy, and plans and maintaining ongoing communications on these items helps to forge it further; addressing and solving their problems completely; and developing personal relationships at all levels.

Creating a partnership with your customers has several benefits. We at RTS have seen it work and have experienced the benefits. Partnership creates a sense of ownership and accountability and turns naysayers into stakeholders by creating a common goal. Clearly, it helps to retain customers and get continued business from customers.  It helps to gain competitive advantage and drive growth. Your customers become your best advocates.  It assists in anticipating what the customer needs before even the customer knows it.  The end result is increased financial performance, enhanced customer satisfaction, and greater brand equity.
What does partnership mean to you? How do you execute it? Please share your experiences and thoughts with us.

Raja Kasilingam

Tuesday, October 29, 2013

The Road Warrior and a Healthy Lifestyle

Meet Mr. Joe Travelalot. He is a road warrior. Works for a company in the Travel Transportation domain. Mr. Travelalot’s job takes him places far and wide. Sometimes within the domestic US and sometimes to destinations as exotic as Malta, Cape Town, Argentina.  The benefits of travelling to such places is not lost to Joe. It is one of the best parts about his job. However, along with the benefits of seeing new places, come the challenges of maintaining a healthy lifestyle while away from home turf.

In the past few years, there has been an increase in the importance of exercise and nutrition. Due to the rising percentage of chronic diseases such as diabetes, heart attack to name a couple, people all over the world are making an effort to gear towards working out on a regular basis and home cooked meals or raw fruits and vegetables. The significance of a well-conditioned lifestyle is not lost to a constant traveler.
The road warrior, more than most people, has to discipline himself even in Argentina (or wherever his work takes him) to find a way to mirror at least to some extent his exercise and food habits. So what are some of the effective exercises that one can implement on the go? And what can one eat so that the waistline stays intact (pun intended!)

Here are two exercises that are simple but 10-15 minutes of these are sure to pack a punch. The quintessential push-up.  This is a very effective exercise that works the upper body and the abs like no other. The form is simple. Space required very little. Best part, can be done anywhere, anytime. If you are in great shape, try a burpee. I specially love this exercise for the challenge it poses even in its simple design. It works the entire body and gets a sweat going within the first few reps.
Steps to do a Burpee: 1) Keep feet shoulder-width apart. Now, lower body into a squatting position, placing hands on the floor in front of you. 2) Kick your feet back so that you are in push-up position. Keep your hands firmly on the ground to support your body. 3) Lower your chest to do a push-up. Bring your chest back up.  4) Kick your feet back to their original position. Stand up, and then jump into the air while clapping your arms overhead. 5) Repeat.

Chew on this: Regardless of your exercise routine at home or away, it’s what you eat that makes or breaks the deal. Aim for the less processed foods on the menu when with a client for dinner or lunch. Try to eat fewer processed carbohydrates, look for steamed or sautéed vegetables, stick to leaner meats. And voila! You can be rest assured that your body will thank you for it later.

RTS’s own road warriors share their tips on what works for them: Raja Kasilingam suggests:  Avoid alcohol; eat protein bar and vitamins; stick to meals that are vegetarian and/or include  fish to the extent possible. Mukundh Parthasarathy agrees with the minimal or no alcohol policy. In addition, Mukundh hits the hotel gym at the first chance he gets and adds an extra 30 minutes to help him sleep better the first night.

There are many ways that a road warrior can attempt to maintain his health. The key point is consistency and discipline. One can find several valuable tools and tips on the internet and there are blogs dedicated to fitness and nutrition for consistent travelers. Here are a few (please note that RTS does not endorse these):


Are you a road warrior with tips on health and nutrition? What has been one of your favorite cities that has been conducive to a healthy lifestyle? We would love to hear your thoughts. Leave us a comment!

Charmi Ramchandani

Account Manager

Tuesday, October 15, 2013

Recruiting reinvented

“Recruitment”, “Staffing”, “Candidate sourcing”, "Headhunting" are just some of the popular terms that explain what a person whose job it is to match a job seeker with an appropriate position. There was a time when the “Recruiter” picked up the phone and made a cold call to a potential employer in the hopes of finding appropriate placement for the candidate and making a commission in the process. I recall my days of opening up the yellow pages and scanning down the companies listed and calling tirelessly till I got a lukewarm “maybe I’ll see your candidate next week”. Even then, there was a 100% chance of the meeting never happening – either the employer cancelling or the candidate being a “no show”.  Recruiters back then had to have the most positive outlook to handle the innumerable “NO”s before landing on a “YES”. Talk about personifying optimism! Still, I believe this tireless exercise built character and a thick skin and created some wonderful sales people.

The past few years have now changed the look of recruiting. It is no longer just plain old cold calling. In fact, no employer wants to hear a pre-written, impersonal script and more often than not, neither does a recruiting professional want to narrate it like a robot.  With LinkedIn and the other social media tools, the emphasis is more on relationship building at any level of positions. Be it executive level placement or technical level recruiting  or even seasonal staffing, a seasoned recruiter now has to step up his/her game to create relationships built on trust with employers. An employer (company) is more willing to engage with a recruiter or headhunter if there is an element of sincere interest and mutual trust in helping the employer and his company achieve its long term goals. A systematic strategy presented by the head hunter that reflects timely implementation and cost efficiencies is more likely to receive long term acceptance. I believe this is even more important with more and more companies outsourcing a lot of their jobs overseas. The reliance on a trust worthy professional who will hire candidates as if it were his/her own company is gaining a new level of significance in the travel and transportation vertical.

In keeping with the relationship building idea, we at Revenue Technology Services, seek to create an environment where a client is comfortable trusting us to provide decision support  solutions covering the areas of revenue management, pricing and scheduling as well as IT Services strategies to achieve their long term goals of profitability and cost efficiencies. We strive to network with our clients over social networking sites such as LinkedIn and attending trade shows as well as hosting our annual summit, with the understanding that relationships take time to develop and dedication to maintain. The one mantra that is never compromised upon is that our client’s success is our success.

As always, we love to hear your feedback and suggestions on our blog. Please feel free to leave us a comment!

Charmi Ramchandani

Account Manager

Wednesday, September 4, 2013

Achieving Success in Automation

Businesses today face a stark reality: anticipate, respond, and react to the growing demands of the market place or perish. This is even more pressing in our travel and transportation industry. In a fiercely competitive environment, business strategy not only determines success, it governs business survival. Now, more than ever, effective business strategy centers on aggressive, efficient use of information technology. But time and again, we see massive failures and delays of automation projects in spite of a comprehensive plan and thought put into those projects. Having been through quite a lot of successful and a few of not so successful automation projects, I thought it’s time to pen my thoughts on the things that have worked in our industry. Here are my top 10 list of things to look out for before embarking on an IT project:

1.       Success – Defining success and figuring out how to measure it is arguably the most important aspect before finalizing the business case for a large scale project. Too often, we assume that success is defined as on time, on budget, and meeting the defined requirements. The project may still be considered a failure if it doesn't deliver the expected business value.
2.       Process – Buy into the processes associated with the software just as much as the software itself. Expect and plan for process changes as you implement the software, rather than applying layers of metaphorical duct tape to a package in order to support a “my way or the highway” approach that has killed many a project. During the software sales cycle, the process and “way of doing things” that the software assumes are just as important as the pretty screens and fancy features. Thinking you can drastically modify one or the other is a recipe for disaster.
3.       Champion – It’s very important for key stakeholders to remain in those positions until the value of the project is delivered. As a plan B, a buy-in from second in line leaders is also important. When projects are 6 months and longer, when the key stake holders leave, in most cases if the next in line don’t buy the vision, the project could get delayed, scope creep and scrapped.
4.       Decisions – As a team, be prepared to make tough decisions that were unpopular with your team, manager or customer to keep the projects on time and budget. Be it finding the right resources for the right roles, business process changes, or communicating in advance.
5.       Customization – Whenever possible, take the system as is – get to know it, use it and document the deficiencies. The customizations are a lot more meaningful and this will also keep the scope creep in check. If budget is the issue, bank some hours for customizations as phase 2.
6.       Define –Sometimes, the people involved in a project—the project manager, team members, steering committee members and sponsor(s)—don't understand their roles and responsibilities because no one defines them. Oversight, setting expectations and asking questions are part and parcel of the equation. Examples of project managers (PM) not showing up for meetings, sponsors not asking questions on scope creep, subject matter experts (SME) in full time jobs not being able to focus on projects. Similarly, vendor resources are over stretched, PMs and SMEs
7.       Documentation While thinking about customizations, try to enforce transparency into the system. Try to get as much as the functional specifications into online help or a knowledge base. Move away from soft copies of documents. Key to have milestones on online help or knowledge base within the system. Users keep moving on and its key to have a central repository of information.
8.       “‘Til death do us apart’” – May sound obvious, but too often, systems implementations fail, because end users are overwhelmed with information and do not understand the system. Retraining after a few months post cutover and time spent hand holding goes a long way adopting the new system.
9.       Test – Quality assurance efforts such as integration testing, black box testing, functional testing and stress testing often get short drift on projects. Sometimes customers get the test scripts from the vendor – that may not be a lot of help!!
10.   Risks – Risk management should be part of any level of planning, whether initial project planning or phase- or stage planning for each new portion of a project. All too often it’s done upfront and then not revisited. Along with the critical success path, have a Plan B if things were to go wrong.
I am sure you have your ‘top 10’ as well and drop me a line if you’d like to share it.

Mukundh Parthasarathy
VP, Cargo Product Management & Marketing

Tuesday, August 20, 2013


Being a business discipline, Revenue Management is an implement once, seldom change approach, right? But then a blog post of a colleague referencing his childhood got me casting my mind back over my time in the airline industry in general, and RM in particular, and thinking about how things have changed.

Yes, the basic principles remain, that of trying to extract the highest price that we can from a particular passenger without scaring them away. However, how this is done has changed significantly. In the old days we had limited competition, very well fenced fares, and in some instances operating subsidies and a booming economy. We were allowed to overbook (within reason) with only limited penalties for getting it wrong. Travel was fairly predictable, the businessman didn’t mind paying for convenience, and all was well in our world.

Enter low cost competitors, multitudes of startup carriers, economic downturns followed by true blue recession, withdrawal of subsidies and government imposed performance penalties.

Over the years the landscape has changed dramatically. Systems have evolved to take advantage of newer technologies and calculations. The internet has raised passenger’s understanding of pricing mechanisms and given them the opportunity to comparison shop from their living room. Booking habits have become less predictable and passengers seem to be leaving it until later to book.

Thus the reflection. All these things happened over time. We meet each challenge, identifying changes and solutions, and add them to our toolkit. If I had to walk in somewhere now knowing only what I did in the early 90’s, I could not expect anyone to take me seriously. However, as with most things, experience counts. Between me and my colleagues we have all seen these changes, lived through these changes, and found competitive solutions over the years.

So remember this when it comes to addressing the business issue: while the basic concepts may seldom change, the people (and the experience of those people) whom you choose to assist in addressing your challenges can make all the difference between success and failure.

Jason Codd
VP, Services

Tuesday, August 13, 2013

Overbooking - Friend or Foe?

What is overbooking? Although the term sometimes evokes a negative emotion, it is a core component of effective revenue management whereby the bottom line is enhanced through maximizing utilization of available space. It is a practice that is widely prevalent in everyday life. For e.g.: Doctors sometimes overbook appointments to accommodate the possibility of some patients not showing up. Restaurants do the same for reserving tables and so on. In the transportation space, overbooking is the practice of selling more seats than capacity in order to compensate for no-shows and cancellations. Airlines typically indulge in this practice in order to minimize lost opportunity by selling seats that would have otherwise gone empty owing to passenger no show rates.

Overbooking practices are typically implemented only in economy cabins as denying boarding to a premium first or business cabin passenger who happen to be their most profitable customers is a risk that most airlines are not willing to take. Given the sensitive nature of overbooking and the prospect of dealing with potential denied boardings, overbooking levels are not set randomly by airlines and involves the usage of historical showup patterns along with sophisticated modeling techniques. These models have the objective of not only maximizing utilization and hence the load factor, but also minimizing the  risk of a denied boarding. Getting the overbooking number wrong typically results in potential revenue downside to airlines in the form of vouchers along with the intangible effect of creating passenger ill-will. In spite of these models, depending on the market and scheduling criteria, passengers denied boardings are not as rare as they should be.

Overbooking, when done the right way can boost airline revenues upto 2%. However, if mismanaged, it can lead to severe negative repercussions including one scene I witnessed at an airport where the overbooked passenger (who happened to be a police inspector) threatened to arrest the check-in agent for not letting him board the aircraft. When a flight is overbooked, airlines typically have voluntary oversales mechanisms which are set in motion where passengers are incentivized to give up their seat and be reaccommodated on alternate itineraries in exchange for a travel voucher.

Overbooking in the cruise ferry space is not as prevalent as in the airline space.  The concept of leaving passengers in the port due to lack of space on the cruise ferry is quite alien and rightfully so, given that the schedules and frequency of sailings tend to be relatively limited. Having said that, cruise ferries are realizing that there is significant revenue being left on the table by not overbooking to compensate for cancellations and no-shows. Even though overbooking at the ship level is a no-no, cruise ferries are considering overbooking certain types of cabins with the understanding that if everybody shows up for that cabin, then some may be upgraded/moved to similar cabin types.

Does your company overbook? If yes, what kind of challenges do you face? If not, is it something you are considering and trying to figure out how this could potentially improve the bottom line. If you need to discuss more about how overbooking could help your company, please don’t hesitate to contact me at Pradeep.bandla@rtscorp.com.

Pradeep Bandla
VP, Product Management and Marketing

Business Analytics.....Old wine in a new bottle?

I still remember the first day of my undergraduate class in ‘Introduction to Industrial Engineering’ back in 1975. As a young boy growing up in a town with open coal mine fields, power plants, and fertilizer plants, I was always fascinated by heavy machinery and wanted to be a mechanical engineer. All that changed completely right after I sat through my first lecture in Industrial Engineering. I was hooked on to it… forever. It was very simple—it just seemed to fit my personality. Industrial Engineering is about constantly finding ways to improve processes and systems. It is about optimizing the performance of people, processes, and systems.

As I continued to pursue my newly found interest, advanced courses and research on quantitative methods seemed to be the logical choice to get me prepared for the real world.  It is not surprising that I passionately love “Business Analytics” and its application to transportation and logistics. Business Analytics is no different than a combination of Industrial Engineering concepts and methods coupled with quantitative methods such as operations research and statistics. It is simply old wine in a new, attractive bottle: the best combination - looks pretty and tastes great.

Business Analytics (BA) refers to the skills, technologies, applications and practices for continuous iterative exploration and investigation of past business performance to gain insight and drive business planning (Beller, M.J.; Alan Barnett (2009-06-18). "Next Generation Business Analytics". Lightship Partners LLC). BA focuses on developing new insights and understanding business performance based on data and analytical methods and helps in better decision-making.

At Revenue Technology Services (RTS), we have the expertise, experience, and knowledge in Business Analytics for the Travel and Transportation industry. Business Analytics is at the core of everything we do at RTS. Our revenue management, pricing, and scheduling software solutions incorporate industry leading statistical forecasting models and network optimization models. We have successfully developed several advanced planning and operational systems using operations research based methodologies that have enabled our customers to make better decisions. Our people bring together a vast amount of expertise and experience in Business Analytics in terms of business knowledge, industry expertise, and IT which are the key components of our and our customers’ success.

Send us a note or give us a call. We will help you look for symptoms that need to be further researched in terms of causes and challenges and turn them into opportunities by analyzing your data, identifying your constraints, and recommending options.

Raja Kasilingam, Ph.D.


The words “Social Media” conjure a collage of the most popular outlets available:  Facebook, Twitter, LinkedIn, Tumblr, Instagram, and Wordpress.  Companies in almost any industry cannot but maintain a presence on at least one of these sites for the endless benefits that have been proclaimed by many a social media expert. Ranging from social branding, to creating a global network, to generating leads, there is no doubt that social media is here to stay.

The question that arises to my mind is what would be an ideal tool from the social media treasure box? To make a case in point, let us take a look at a company like Revenue Technology Services that is very unique in its products and has a niche clientele.

“Revenue Technology Services (RTS) is a worldwide provider of profit enhancing revenue management and pricing software solutions for passenger and cargo transportation industries. Our offerings, aimed at the Airline, Cruise Ferry, Rail and Coach verticals include software solutions, consulting and education services, operations research capabilities, technology services and IT development support.”

The uniqueness of RTS’s products and clientele makes a case in point that companies such as these need to maintain an even more active presence to create an awareness of their business so that even if a follower on LinkedIn or Twitter may not necessarily fit the company’s description of an ideal client, they can tap into their network to help RTS reach its goal of lead generation. Most of RTS’s effective social media marketing has occurred through the professional network LinkedIn. Through this professional network, RTS has managed to grow its connections and reach potential clients all over the world by leveraging LinkedIn’s vast array of professionals.

The weekly blogs posted on LinkedIn are another effective tool to create a readership. RTS aims at establishing credibility as an informative contributor to social media world. They provide an effective outlet to talk about the company’s experience, opinions and ideas relating to the Travel & Transportation industry. The weekly blogs that are posted on LinkedIn, Twitter and Facebook have helped create a buzz around the company. While companies such as RTS need to work harder at maintaining their presence due to the sheer nature of its business, there is no denying that consistency will lead to brand awareness and eventually to lead generation. RTS highly values its followers comments with much respect and makes every attempt to provide timely feedback from their resident SME’s – our ultimate goal being improved products and services.

Is your company in a niche industry like RTS? What are your effective social media tools? Drop us a line in the comments section and connect with us on LinkedIn or follow us @RTSProfitOpt. 

Charmi Ramchandani
Account Manager

Trust your Klout

Travel and Transportation Industries are undergoing dynamic changes with respect to scalability, information accessibility and customer knowledge. To be competitive these players will have to continuously innovate ways to ensure better customer service as well as reduce operational costs through effective use of information technology. The huge effect of social media in the Travel Transportation and Logistics industry, just like the recent Klout score giving you access to the Admirals Club at American Airlines, makes you wonder how legit and authentic the data is. Shouts out for all the more reason for perfect analysis and testing of data (Big data) and other influential scores. The algorithms comb through social media data within the airlines systems to ensure the passenger's authentic travel. Klout is starting to infiltrate more and more of our everyday transactions and specially in this domain.

At RTS, we bring over our vast experience of supporting various mission critical applications of leading travel and transportation providers. We help them achieve their goals of quality customer experience with clear cost merits and continual process improvement. With a large resource pool of technical and functional consultants, we support this practice around the clock which makes us unique in the travel and transportation vertical.

Our domain knowledge coupled with technological proficiency has helped our customers address operational, quality, and cost challenges. We bridge the gap between business and technology, with intent to optimize costs and improve customer experience given the advent of social media in our everyday lives.

Give us a shout... network with us.. so we can help you reach your objectives.

Deeshi Gandhi
Technical Manager

Price Sensitive Revenue Management (Stretching the Benefits of Price Elasticity)

A couple of years ago I was asked what would be the most significant changes for our passenger product for Cruise Ferry clients over the next few years. With an ever more competitive market place, the need to better understand the customer’s willingness to pay, and a desire to simplify the pricing structure and booking process, I’d answered Price Sensitive Revenue Management (PSRM).

As usual there may be resistance to adopting such a change. So what are some of the additional benefits of Price Sensitive RM other than the potential revenue gains and a better understanding of the price elasticity of your customers?

The simplification of the fare class structure by moving to a more ‘transparent’ single fare should provide benefits in a range of areas and business processes.  It will reduce the number of brochure fares/tariffs significantly, immediately improving the workload for those responsible for their administration and maintenance in systems support. This in turn should improve the booking process and ideally provide a quicker website response for online purchases, which of course is an ever growing and seemingly unstoppable portion of the business.

With a single price point, the individual departure review and decision making times for Revenue Analysts should be reduced, increasing their productivity. It will be much easier for agents and customers to compare a single price offering on a range of sailings and make bookings at a price and time to meet their travel requirements. Comparison with competitors will be more straight-forward making commercial pricing decisions easier at the wider market level.  From a marketing perspective, this can now really be seen as ‘From Pricing’ without those hidden conditions, again improving the customer booking process and experience.

A common concern within management is that the removal of the discounted period fares is not seen as preventing the possibility of lower fares and that the price sensitive customers are still given an option.  This is of course a main objective of adopting PE, with, where price elasticity dictates, even greater protection for the most popular departures, whilst giving the price sensitive customer an increased number of viable alternative sailings to choose from. In addition the option to have a non-decreasing fare policy exists, so that for certain sailings, markets, or periods, a system setting will prevent the current price from ever going back down. A hybrid PSRM model can be used so that certain classes/products (such as tour operator allocations) or markets could be simultaneously managed by traditional demand and optimisation.

In addition to a successful launch of PSRM in our ProfitOpt solution at Brittany Ferries, RTS has been conducting a Price Elasticity simulation study for a client interested in understanding the potential revenue improvements associated with PE in a restriction free pricing structure, compared to the current traditional period return/length of stay restrictions. With these initial results looking positive I believe that Price Elasticity will continue to play an increasingly important role with our current and future client base.

Patrick Allen
Project Manager and Consultant

Who is Your Competition?

In a previous blog posted by Pradeep Bandla he discussed how a passengers booking behavior can be influenced by the competitor actions in markets where there is choice of providers and how getting visibility in your competitor’s actions can influence your bottom line.  This got me to thinking who or what is the competition.

In today’s transportation marketplace there are many entities that are going after the same passenger.  For example, in the airline industry your competition is usually one or more other airlines especially at large regional airports and international airports.  Competition can be limited from a geographical perspective – islands, remote areas, small regional access. In this case, you might be the only travel option for the passenger. But most prospective passengers have other choices depending on where they are going, time that it takes to travel to their destination, reason for travel, etc.  Passengers traveling regionally will also have more travel options than those traveling a long distance. This means that your competition could be from an airline, bus, train, personal vehicle, passenger ferry, or any other form of transportation.

In the cargo transportation industry customers usually have a wide range of options depending on the marketplace, shipment priority, destinations, weight/size, perishable/non-perishable, etc. These options could include airline cargo, ocean shipping via container cargo, road transport, rail transport, and inter-land waterway.

In some cases your biggest competitor could also be your own company.  A good example is the rail industry.  You are competing many times for the same passenger on routes which support both intercity and rapid transit (direct) and high-speed trains.  In the cruise ferry industry it could be standard ferry versus fast craft (hydro foils).

In today’s transportation marketplace there are many entities that are going after the same passenger and in order to be in the front of the pack we need to understand who, and in some cases -  what, is our competitor and how do we better compete against them and impact the bottom line.

As always we would be interested in hearing your thoughts on this topic or any other topic in our blog.

 Robert Harris
Sr. Solutions Consultant

For the price of a cup of coffee

IATA recently revealed their forecast for the coming year for airline revenues and traffic, and included in that was the 2012 revenue versus cost data. The figures revealed that the average revenue per passenger worldwide exceed the cost of carrying that passenger by $2.56. That’s right, a shade over 2 and a half bucks! That is less than a cup of coffee in most places, and that profit includes a significant portion from ancillary revenues, without which there would be a shortfall per passenger carried.

In this same climate, passengers still feel they are being forced to pay way over the odds for travel. Perhaps this is as a result of the Low Cost concept penetrating people’s minds, or maybe a lack of understanding of the costs involved.

Equate this with running a car. Typically when discussing “your” vehicle, you end up with a couple of distinct groups. On one hand you have those who discuss what a bargain they got on the vehicle cost regardless of maintenance and running costs. On the other hand, those who debate endlessly the low fuel consumption, yet disregard the asset cost, and sometimes other running costs.

Those organisations involved in the mass transportation of passengers do not have the luxury of looking at one or the other of these aspects. Asset costs and financing, operating costs, maintenance costs and insurance all come into play. However, in addition to this there are costs associated with landing/docking/parking/navigation/piloting to be considered. Motor vehicle owners actually have similar issues on occasion, without realising it. There are road taxes to cover road maintenance, parking costs in many areas and traffic fines (yes, you know who you are!). There is stress about accident damage, theft, traffic jams, all contributing to the total investment.

Now on top of all this, imagine you have to transport people in your vehicle for reward, and actually make enough to turn a profit. This is exactly what the transportation organisations need to do, often in a particularly cutthroat marketplace. Do yourself a favour, and work out what you might have to charge someone for a trip in order to cover costs plus that $2.56 cup of coffee and you would be surprised.

Did I have a point to all this? Why compare my car to a ship or aircraft, they are in a different league?
Take the analogy a step further. You shop around for insurance deals. You shop around for the best asset cost. These are the bigger things. But on the smaller things, and those which may make more subtle differences with a better financial reward, we have a variety of tricks. Most of us try to optimise our vehicle running costs. We look for cheaper fuel, and evaluate the distance to that fuel station versus the cost saved. We perform basic maintenance checks. Something as small as incorrect tire pressures can increase running costs by a few percent.

Now put this into the context of this article. Operators have similar behaviour. Assets are researched for the best cost options, as are many of the running costs. Schedules are planned both to serve the market as well as optimise utilisation of the asset. At the end of the day, there is only so much that may be done on the cost side of the equation, which is where Revenue Management/Profit Optimisation comes into play. Think of it as your tire pressure gauge. It is there to assist in tweaking that last couple of cents for the coffee out of the market demand.  Undoubtedly we are trying to get the passengers paying a little more. Perhaps a little more than they would like, but at no point more than they are prepared to pay. We are not in an auction frenzy here where people may be carried away by bidding, and we cannot force passengers to buy a ticket. It is basic supply and demand, albeit with a lot of math behind the scenes. If the price is too high at that time, the passenger will either look for a different time, or pay the price. But basically the passenger needs to understand that Revenue management is setting the number of prices on offer based on the expected number of passengers who may be prepared to pay, so if they do not take the space at that price, there are others who will.

Over time, those cups of coffee add up to a bigger pot, which may mean the difference between being in the red or in the black at the end of the financial year.

And that means the difference between having the coffee shop around to offer you coffee in the future!
As always, we want to hear your thoughts. Leave us a comment below.

Jason Codd
VP, Services

Monday, August 12, 2013

The Mystique of pricing in the Air Cargo industry

What does the term pricing mean to you, I asked a few guys that I know of who work in the airline cargo departments? Here is a sample of the answers that I got:
“Picking up the appropriate rate for a shipment at the time of booking? she said, to which I responded, “Isn’t that online rating?” She rolled her eyes and quipped back, “We don’t have data in the cargo industry like the MIDT in the passenger side to really talk about pricing."

A few of the revenue accounting experts enthusiastically responded the rating functionality within the revenue accounting system is what is defined as pricing in the air cargo world. "Hmmm…isn’t rating nothing but application of rates from the rating engine that comes with the revenue accounting system or a Res/Ops system? In other words, rating is a function of maintenance and application of rates and prorates. Would you agree? And plus how do you come with those rates? ”, I asked. “We never looked at it that way. We always thought the act of rating is pricing as opposed to focusing on what should be the basis of coming up with those rates. You may have a point!”, the revenue accounting manager retorted grudgingly giving me some credit.

A long term veteran in the revenue management department from my alma mater quipped, “Pricing means hurdle prices or bid prices generated by revenue management systems”. Bid prices or hurdle prices are guidelines using which you reject, accept or reroute shipments. The basis of these bid prices are still demand driven by rate and density.

Unlike our passenger counterparts where pricing directly refers to fares and a lot more transparent, the air cargo world struggles to define this and cannot even talk amongst themselves, wary of the recent price-fixing allegations and associated fines.

Pricing in air cargo world in my humble opinion is the determination of what prices to put in the rate sheet. It could be tariff rates, contract rates or spot rates. How do you determine this number? Is there any method to this madness? Most airlines solely depend on hearsay and experience of the sales teams in combination with some 3rd party data to come up with the prices.

There was one air cargo pricing head and sales head who were brave enough to admit to me that they go into meetings with forwarders where the forwarders let them know how much business they give to the airline and how much should the airline price their space. I was shocked but at the same time I understood his plight.
Can there be any intelligence and decision support built into a model to recommend a consistent way of producing these prices? Should airlines consider various pricing drivers like customer value, competition and maybe even price elasticity to come up with prices?

As a first step, an airline needs to understand and comprehend the effect of customer value, competition, costs and price elasticity. Once you model these, suggested prices need to be converted into average prices by different weight breaks as well as container/pallet types.

I have some answers on the above topic and I look forward to hearing from you on your thoughts in the comments section below.

-Mukundh Parthasarathy
VP, Cargo Product Management & Marketing

Tuesday, July 23, 2013

Higher yields are good, but higher margins are even better

IATA’s most recent Cargo Tracker indicates air cargo business experiencing better operating conditions over recent months, leading to an increase in air freight volumes, stabilization in yields, and a more optimistic outlook for 2013. This is good news for most carriers, but how do you turn this into GREAT news for your organization. The question is as yields stabilize, how can a carrier improve margins? The general answer lies in three key areas: enhancing revenues, preventing revenue leakages, and reducing costs.
Specifically, revenue enhancement comes from rationalizing and streamlining schedule, products, and prices and managing available capacity and controlling access to capacity. Preventing revenue leakage has several dimensions to it, including but not limited to accurate dimensioning (while tendering of shipments), better asset management (ULD tracking), and accurate rating and billing/invoicing. Route optimization, efficiencies in unitizing, staffing, processes and contracts, and reducing service failures can lead to reduction in costs.
While focusing on all of the above areas at the same time may appear to be an insurmountable task, there are some quick hits and low hanging fruits that will have immediate impact to the bottom line. Identifying these areas and addressing some of the inconsistencies and challenges can result in up to 10% increase in margins.
We, at RTS, use our industry recognized Airline BPM 2000 methodology to help carriers realize the financial benefits in terms of margin improvement that involves the following:
  • Envision – Establishing management commitment and vision
  • Initiate – Communicating to the stakeholders
  • Diagnose – Documenting existing processes
  • Redesign – Define and analyze new process concepts and design measurable KPIs
  • Reconstruct – Reorganize processes, communications and data
  • Evaluate – Evaluate process performance
Time is of essence here. Capacity is perishable, so is time…let us talk. Leave me your thoughts and comments below.
Raja Kasilingam

Competitive Insight

Historically, cruise ferries have just relied on their own booking data to generate forecasts and subsequent optimization controls without taking into account competitor actions. However there is a growing realization in the industry that passenger booking behavior is influenced by competitor actions in markets where there is a choice. Getting visibility into competitor actions on a regular basis and factoring that in setting inventory levels is imperative for a cruise ferry to retain passengers as well as positively impact the bottom line.
Though most cruise ferries employ some form of competitive insight through manual processes, automated processes to monitor competitor activity and influence inventory decisions have been the exception rather than the rule. Studies have also revealed that using competitor price as the sole criteria in making inventory decisions  typically results in revenue reduction in the long run and so inventory levels need to be adjusted not just based on competitor fares but also characteristics associated with the cruise ferry including seasonal loads, customer loyalty, sailing times, etc.
Automated revenue management systems that can consume competitor data from third party vendors on a regular basis, identify the optimal competitor based on user and system based matching logic and present the results to analysts so as to enable them to make informed decisions can greatly reduce analyst workload while eliminating human error. As awareness increases in the cruise ferry industry about the importance of factoring in real time competitor actions in the decision making process, the need for automated revenue management systems that take into account market conditions and enable analysts make informed decisions is on the rise.
 Would be interested in hearing your thoughts on if and how your companies take into account competitor influences and if you want to learn more about how the ProfitOpt system takes these into account, please feel free to contact me.
Pradeep Bandla
VP Product Management and Marketing