Even as it is battling the current downturn in travel, Jet Airways has started work to migrate to a network-based revenue optimisation programme.
Its current revenue programme works on individual flights
MUMBAI: Even as it is battling the current downturn in travel, Jet Airways has started work to migrate to a network-based revenue optimisation programme.
Under the current system, Jet’s programme works on individual flights. The country’s largest private sector airline is now evaluating the process and methodology of leveraging its network, which will take two years and an investment of $5 million.
Raj Sivakumar, vice president, revenue management, said, “We want to become the leading airline in the region and this shift will help us leverage our expanding network and optimise our revenues.”
He said moving to the network model would help add to the yield, as the airline would gain by selling its seat inventory seamlessly, at the best prices across the network.
Revenue management at airlines requires the carriers to forecast future demand, optimise price points and optimally allocate seats, all based on passenger price sensitivity. Software is used to analyse trends as well as booking history to generate these data.
Take a Mumbai-Delhi flight as an example. The system predetermines expected demand and slots fares into various levels. If demand is expected to be from higher-value passengers, then it sets aside more seats for such traffic, so that those are not sold at a lower fare level.
Network carriers like US-based United Airlines (UA), have a well-organised revenue management system. UA’s system generates as many as 110 million forecasts on pricing and inventory for 4,000 flights in just under four hours, every day.
According to experts, no Indian carrier is looking at revenue management as a dedicated stream to help improvise systems. Nor has any Indian airline made a shift to a network-based system or operating point-to-point services in the domestic and international space.
Sivakumar said, “Yield management is an issue for Indian carriers and there is a need to create more efficient systems.”
Mark Martin, senior advisor-aviation, KPMG, said Indian carriers can cope with the crisis only if they re-engineer themselves to become lean and efficient. “Re-looking at fleet deployment, re-evaluating the capacity in the market and the overall network is needed in crisis situations.”
He added that Jet is re-engineering itself to suit the market demands. “While utilising its established network, Jet would see marginally less operating cost,” he said.
Airlines are hoping that better revenue and yield management practices will help use resources more efficiently and minimise losses.
The global aviation industry is facing a severe crisis, as volatile fuel prices have increased expenses and fall in travel has lowered revenue. According to the International Air Transport Association (IATA), global airlines may post combined losses of $5 billion this year.
The situation in India, where carriers are bleeding, isn’t very different.
s_archana23@dnaindia.net 
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