Work Hard. Fly Right. SM Work Hard. Fly Right. SM A NETWORK ORGANIZATION AGIFORS Conference Honolulu, HI June 3 – 5, 2003 Mandeep Grewal MANAGING DIRECTOR

Work Hard. Fly Right. SM


A NETWORK ORGANIZATIONA NETWORK ORGANIZATION

AGIFORS ConferenceHonolulu, HI

June 3 – 5, 2003

Mandeep Grewal MANAGING DIRECTOR – REVENUE MANAGEMENT


Agenda

• The way we were…

• What we became…

• Who we are today…

• A Network Organization

• The missing piece…

• Questions


Who we were…

• A distinct Revenue Management group

• A Domestic and International group

• Productive – “Yes”

• Optimal – “No”

Domestic International


What was missing…

• Limited interaction

• Decisions in a vacuum

• Lack of comprehension of the impact of the 3 groups on each other

Scheduling

Pricing



What we became…(in 1999)

Pricing & Revenue Management Group (PRM)

RM Pricing RM


Pricing


Benefits of a PRM Group

PricingDemand Stimulation

Benefits:

•Greater understanding of the impact of the 2 groups on each other

•Quicker reaction and adjustments made to forecasts by RM to Pricing changes

•More coordination on implementation of strategies

PricingDemand Stimulation

RM

Demand Management


Questions being asked…(in 2001)

• Are we making the optimal revenue decisions for the company?

• Are we carrying the right flow versus local traffic across our system?

• Is Scheduling aware of what is driving the demand and how demand is being managed?


System focus?LGW

EWR

BOS

MCO

•Maybe too much focus on the different entities…Domestic & International. •More focus needed on understanding system flows


What was missing…

• Scheduling not always aware of the demand driver…the vicious cycle of demand & ASMs

Pricing

RM

Scheduling


The challenge…

Situation: High Loadfactors

Scheduling

Pricing

Revenue Mgmt

Add ASMs

Different Pricing Strategy

More aggressive mgmt


The vicious cycle…High LFsRevenue Spill

Optimal

Over-management

Under-management


The ultimate question…

“What supply is needed to meet the demand generated at the right price”

Pricing

Scheduling

Revenue Mgmt


Network Group

RM

Pricing

Scheduling

?

Communication


Benefits

Specialists but educated about other fields

• Coordinated RM efforts• Local vs. Flow• Domestic & International

• Pricing• Consistent approaches in the Pricing world• Published & Un-published• Domestic & International• More focus on strategic & tactical pricing to capitalize on high

demand days


Benefits

• Scheduling

• Future Planning done with an in depth understanding of the demand drivers

• More optimal use of aircraft during times of peak travel through coordinated requests…not First Come First Serve

Increase in revenue and higher RASM


The ever evolving organization…


Network Group

RM

Pricing

Scheduling

DistributionPlanning


Our current challenges…

• Poor economy & global situations

• Business traffic down

• Declining leisure yields

Maintaining Revenues

Keep Costsdown


We are in a different era…

• Increase in inventory being sold through the internet and other lower distribution cost channels

Seller Buyer

Cheaper distributioncosts

Ability to shopEase of buying

Cost

s

Revenu

e


Align our objectives

RMDistribution

channels

How to get the best revenue(net of costs)Better mix

How to get the best priceMore volume

Airlines Pax

Lower costs Lowest fares


Inventory control?

• Have to ensure that we maintain control of inventory

• As technology advances, we have to ensure that RM still decides what pax to accept/reject

• Need Distribution Planning to help achieve RM’s objective


Network Group

RM

PricingScheduling

DistributionPlanning


Questions?

Documents

Work Hard. Fly Right. SM Work Hard. Fly Right. SM A NETWORK ORGANIZATION AGIFORS Conference Honolulu, HI June 3 – 5, 2003 Mandeep Grewal MANAGING DIRECTOR