(R)evolutions?

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