Embed Size (px)
Citation preview
1
Breakthrough Customer Service with Breakthrough Customer Service with a Revenue Management Twista Revenue Management Twist
Presentation to the AGIFORS Reservations and
Yield Management Study Group
Tom Svrcek, Ph.D.
SVP of Technology and Planning
A Call to Action
2
Outline of DiscussionOutline of Discussion
Introduction to Indigo
Indigo’s Client Notification System
Revenue management applications
Call to action
3
Indigo – An IntroductionIndigo – An Introduction Wholly owned subsidiary of NewWorld Air Holdings, Inc. Organized to market, operate and distribute business jet aircraft in
regular and frequent commercial service Flights operated as public charter operator under DOT Part 380
under FAR 135 Air Carrier certification Initial target – “ultra high yield” business travelers ($3.00 to
$10.00 per RPM) who have already adopted the business jet as their preferred mode of air travel
Penetrate market by offering charter capacity in select city pairs – thereby increasing utilization of aircraft, lowering hourly operating costs and making it possible to offer capacity at discounts to charter operators
4
Full ownership
• Participants purchase jet outright
• Assume all costs (e.g. fuel, pilots, maint.)
Fractional programs
• Participants purchase shares (1/2,1/4,1/8)
• Pay monthly management and hourly fees
Charter flights
• Participants take no ownership stake in jet
• Pay per trip fees that cover asset and utilization risks taken by owner/operator
Private Air Carrier (PAC) market is one of the fastest growing commercial aviation segments and is composed of three primary sectors
Asset risk Utilization risk
Overview of Competitive LandscapeOverview of Competitive Landscape
5
Our Unique Value PropositionOur Unique Value Proposition
Offer the “public” jet service, eliminating the need for high-yield travelers to take an asset position in the aircraft
Provide regular and frequent service between select city pairs through public charter aggregation of demand – reducing utilization risk by individual traveler
Utilize less crowded general aviation terminals and/or airports located in many cases closer to residential areas and regional business centers
Offer comfort, convenience and productivity of the corporate business jet without the typical entry price
6
Our Customer Service ChallengeOur Customer Service Challenge
Level of service provided by competitors is high (e.g. complete flexibility of departure/return times, highest degree of industrial security)
Benefits of general aviation infrastructure (local proximity, reduced congestion) come at risk of operational vulnerability – limited alternatives in the event of service interruptions
Need to keep passengers well informed about service irregularities to generate success for service and create lasting customer loyalty
7
Our Customer Service ChallengeOur Customer Service Challenge
Cost of notifying customers in a timely fashion via their preferred communication channel using traditional methods would be cost prohibitive
Associated costs include at a minimum outsourcing/staffing a 24x7 “notification center” for outbound calls to customers
8
Solution: Client Notification ServiceSolution: Client Notification Service
Web-based, personalized notification service enabling the proactive notification of travel related events (flight delays, cancellations, waitlist clearing)
Outbound service across multiple communication channels (telephone, mobile phone, pager, fax, email, etc.)
Messages delivered simultaneously to all travelers and precisely how each wishes to be notified
…True breakthrough in customer service
9
Outline of DiscussionOutline of Discussion
Introduction to Indigo
Indigo’s Client Notification System
Revenue management applications
Call to action
10
Client Notification SystemClient Notification System
Data storedon their servers
11
Contact InformationContact Information
12
User Designed PreferencesUser Designed Preferences
13
Flight operations
Delays the departure of the inbound aircraft’s next flight
Flight operations
Delays the departure of the inbound aircraft’s next flight
Inbound flight is delayed due to
weather
Client Notification System
Obtains “manifest” from the delayed flight to determine which passengers are affected and generates a message with “parameterized” information based on event type
Client Notification System
Obtains “manifest” from the delayed flight to determine which passengers are affected and generates a message with “parameterized” information based on event type
Event Trigger: Flight Delay ExampleEvent Trigger: Flight Delay Example
14
From: IndigoIndustry: AirlineType: Delay
Parameter 1: Flight 123Parameter 2: ChicagoParameter 3: New YorkParameter 4: 90 minutesParameter 5: 7:30 p.m.Parameter 6: 9 passengers
Unique identifiers
ID #1 ID#4 … ID #2 ID#5 … ID #3 ID#6 …
Message
Indigo Flight 123 from Chicago to New York has been delayed by 90 minutes. The new estimated departure time is now 7:30 p.m.
We apologize in advance for any inconvenience this delay may cause you. If you would like to change your travel plans please call us toll-free at 1-877-446-3446.
Message to be created
Event Trigger: Flight Delay ExampleEvent Trigger: Flight Delay Example
15
The Messaging EngineThe Messaging Engine
16
Message created
Indigo Flight 123 from Chicago to New York has been delayed by 90 minutes. The new estimated departure time is now 7:30 p.m.
We apologize in advance for any inconvenience this delay may cause you. If you would like to change your travel plans please call us toll-free at 1-877-446-3446.
Telephone
Mobile phone
Pager
Fax
Message is delivered simultaneously to all appropriate users according to each’s preferred notification method
The result is breakthrough customer service at a fraction of traditional costs
One-to-Many Personalized NotificationOne-to-Many Personalized Notification
17
Schedule changes
Upgrade notification
Flight dept./arrival info.
Lost luggage tracking
Frequent flier status
The departure time for Flight 232 from Chicago to Boston on Friday, February 4th has been updated from 8:00 p.m. to 7:50 p.m. Please make a note of this change.
Your upgrade on Flight 2201 from Chicago to Dallas-Fort Worth on Friday, April 21st at 6:00 a.m. has been confirmed. Your seat number is 3B.
Your luggage from Flight 345 from Atlanta to Charlotte with ID# 1234567 has been located. To arrange a messenger, please call us toll-free at ...
The departure gate for flight Flight 1701 from Houston to Phoenix on Friday, February 4th has been changed to H11. The expected departure time remains 11:30 a.m.
Congratulations! You have reached the highest status level in our frequent flier program. As a way of saying thank you for your continued loyalty, we will be sending you two first class upgrades good anywhere on our system ...
Event Sample messages
Other Scheduled Airline ApplicationsOther Scheduled Airline Applications
18
Outline of DiscussionOutline of Discussion
Introduction to Indigo
Indigo’s Client Notification System
Revenue management applications
Call to action
19
SummarySummary Once adopted by a critical mass of travelers, new preferences
can be added to further improve the level and type of information flow between airline and traveler
A “flight switching incentive” is one feature that could be added to encourage travelers, under certain circumstances, to switch flights voluntarily in exchange for voucher compensation
By using profile information and varying incentive levels, airlines can proactively manage such events as aircraft down gauging, oversold flights and ad hoc group requests
The result should be lower recommendation costs per passenger and improved customer loyalty
20
Description
• Included in the Travel Related Preferences section of the user’s profile
• Allows traveler to identify their threshold compensation to switch to a different flight
• As with other events, allows traveler to specify how he/she wishes to be notified
New product can be incorporated seamlessly into a traveler’s existing messaging preference profile
Travel Related Preferences
Flight switching incentive
Notify me if switching incentive is at least
Method 1 Method 2 …
Mobile1 Office1
$100
New Preference IntroductionNew Preference Introduction
New
21
Event TriggerSmaller aircraft re-assigned when bookings already exceed capacity of new aircraft
Or, D3 optimal solution is not feasible due to excess bookings on one flight
Message created
The aircraft originally assigned to American Airlines Flight 123 departing from Chicago to New York at 7:00 p.m. has been replaced by one with fewer seats. We are currently in the process of trying to re-accommodate passengers on other flights.
If you would consider moving to a different flight, we are offering an incentive of $50. Please call us toll-free at 1-800-843-3000 to rebook your itinerary.
You are one of 10 passengers who are receiving this message.
Aircraft Downgauge ExampleAircraft Downgauge Example
22
Event TriggerGroup request is received for a flight having just less than the required AU level needed to accept the request (e.g. 50 with AU of 45)
Message created
An opportunity for you to switch airline flights and receive voucher compensation has been created. You are currently booked on United Airlines Flight 123 departing from Chicago to New York at 7:00 p.m. on Friday, April 21st.
If you would consider moving to a different flight, we are offering an incentive of $200. Please call us toll-free at 1-800-241-6522 within the next 5 minutes if you are interested in rebooking your itinerary.
You are one of 10 passengers who are receiving this message.
” ” ”= 50
but AU(Groups) = 45
Ad Hoc Group Request ExampleAd Hoc Group Request Example
23
Event TriggerFlight is in an “over-oversold” situation
Possible causes
• Overaggressive sales reps, airport agents, etc. trying to accommodate their “best customers”
• Higher than expected consolidator sales
• Special event not anticipated by rev. management system
Message created - (Conservative)
Continental Airlines Flight 123 departing from Chicago to Newark on March 4th at 6:00 p.m. is in an oversold situation. There are seats available on flights departing at departing at 7:30, 8:00 and 10:00 p.m. If you would consider moving to a different flight, we are offering a voucher incentive of $100.
Please call us toll-free at 1-800-525-0280 if you wish to be placed on the waitlist. Your name will called at the departure gate for your original flight if we need to re-accommodate you.
You are one of 10 passengers who are receiving this message
Message created - (Conservative)
Continental Airlines Flight 123 departing from Chicago to Newark on March 4th at 6:00 p.m. is in an oversold situation. There are seats available on flights departing at departing at 7:30, 8:00 and 10:00 p.m. If you would consider moving to a different flight, we are offering a voucher incentive of $100.
Please call us toll-free at 1-800-525-0280 if you wish to be placed on the waitlist. Your name will called at the departure gate for your original flight if we need to re-accommodate you.
You are one of 10 passengers who are receiving this message
Ted Botimer Revisited: Overbookings Ted Botimer Revisited: Overbookings for Salefor Sale
24
Message created - (Aggressive)
Continental Airlines Flight 123 departing from Chicago to New York on March 4th at 6:00 p.m. is in an oversold situation. There are seats available on flights departing at departing at 7:30, 8:00 and 10:00 p.m. If you would consider moving to a different flight, we are offering a voucher incentive of $100.
Please call us toll-free at 1-800-525-0280 if you wish to be rebook your itinerary now and collect your voucher.
You are one of 10 passengers who are receiving this message
Choice between conservative and aggressive management may depend on
• Degree to which “booked” exceeds capacity or target AU (possibly fare class specific)
• Cost tradeoff between voluntary DBs at the gate and going out with empty seats
Overbookings for SaleOverbookings for Sale
25
1. Event triggerRequest comes in for a high fare (though still capacity controlled) bucket that has already sold out.
2. Switching opportunity Contact currently booked passengers with designated switching thresholds to see if any are willing to move to another flight, thus opening up the higher fare class AU.
3. Description of decision to be made Is the incremental revenue the airline receives from being able to accept the higher fare passenger greater than the cost of finding someone to switch and paying their threshold compensation.
Factors to consider
• Intangible benefit of increased customer satisfaction of both the high fare passenger and the passenger who elects to switch
• Incremental revenue of greater “high fare” acceptance, though must be considered on a “net” basis, including the recapture rate of the high fare passenger
• Costs associated with
– System development– Notification– Incremental inbound calls
made by interested “switchers”
Logical Extreme -Notification Based RMLogical Extreme -Notification Based RM
26
Ingoing HypothesesIngoing Hypotheses Creation of a reverse auction among travelers willing
to switch for voucher compensation will lower average cost of re-accommodation per passenger as well as carrier’s overall expenditure on denied boarding
Proactive notification will reduce the overall volume of complaints related to lack of information, leading to a decrease in overall customer service costs while increasing loyalty
For major US carriers, estimated savings related to fewer DBs and fewer complaints could be in the millions of dollars annually
27
Outline of DiscussionOutline of Discussion
Introduction to Indigo
Indigo’s Client Notification System
Revenue management applications
Call to action
28
SummarySummary
Long term success of the Client Notification Service is contingent upon attracting a large community of travelers
A large user community benefits both message creators (increased chance of finding travelers willing to switch flights) and end users (convenience of maintaining a single profile)
The larger the community, the more likely other message creators (credit cards, rental cars et al.) will be inclined to define events and notification
Client Notification Service offers new venue to service customers and encourage loyalty
29
Profile forAAProfile
forIndigo
Profile forCO Profile
forNW
Costs of maintaining multiple profiles
• Slower consumer adoption due to increased “hassle” of creating and more importantly maintaining multiple profiles
• Data reliability issues if user does not update all profiles in the event of a change in his/her contact information
Highest level of customer service comes from the single profile model
Consumer Benefits to a Single ProfileConsumer Benefits to a Single Profile
30
Airline
Hotel
CreditCards
Ren
tal
car
Suspicious activity on your card
Two-day rental is overdue
You have cleared waitlist for March 4th
Benefits to traveler
• As community grows, more message creators are likely to adopt the service
• Travelers can then enjoy as much (or as little) information flow as they desire
• In each case, user gets to define how he/she wants to receive content
Service Improves with Scale and ScopeService Improves with Scale and Scope
31
Leapfrog competitionIncreased FF adoption
Leapfrog competitionAccelerated web traffic
Additional Benefits of AdoptionAdditional Benefits of Adoption Non – FF members who want to
benefit from notification are more likely to join – particularly if they are “seamlessly linked”
Once profile is built, users return to site to
– Modify contact information and preferences
– Learn about new event-driven services
Increased traffic increases the likelihood of online bookings click-throughs to service partners etc.
