Session Five :

Panel discussion - Crafting the right revenue management strategies to achieve maximum yield and profitability

The fifth business session of the day, a panel discussion focused on maximising yield through effective inventory control and creating an optimal pricing structure. The moderator for the session was David Huttner, Managing Director, Planely Spoken and the panelists were P K Gupta, Executive Director – Sales and Marketing, Passenger SBU, Air India; Urs Weiss, Director, Head of Revenue Management and Pricing, Swiss International Airlines; Raj Sivakumar, Vice- President, Revenue Management, Jet Airways.

With the difference between Full Service Carriers (FSCs) and Low Cost Carriers (LCCs) slowly diminishing, full service airlines offering long-haul services at low fares to compete with LCCs and LCCs overall generating revenues by bringing first time travellers onboard, the need of the hour is to find out ways for optimal revenue generation for the FSCs.

The session highlighted that forecasting the right number of seats (inventory) at the right prices to appeal to different customer segments, overcoming challenges of balancing between setting optimal selling price versus accurate forecasting of customers' demands, achieving high seat factor without losing substantial profitability in the face of stiff price competition and aligning revenue management strategies with innovative marketing strategies to encourage clients to buy the product will help in maximising yield and creating an optimal prices structure.

P K Gupta, Executive Director – Sales and Marketing, Passenger SBU, Air India said, "Yield is not an isolated but a part of the overall revenue generation of the airlines. Yield management is driven by factors such as services on board, connectivity offered, arrival time of the airline etc. All these factors are important for achieving high yields." Whereas Raj Sivakumar, Vice- President, Revenue Management, Jet Airways maintained that a smart carrier can find a way to extract the right price regardless of what category it is branded in.

For achieving maximum yield and increasing profitability, Urs Weiss, Director, Head of Revenue Management and Pricing, Swiss International Airlines was of the opinion that FSCs need to further bring down their fares without becoming an LCC as also try to negotiate charges with GDS companies.

The panelists further added that LCCs have higher aircraft utilisation; they fly short distances and have no frills. This model helps them in generating higher revenues. Hence, FSCs need to increase the load factors and fly on routes which provide both local and connecting traffic. Weiss offered, "Swiss is seeing huge profit gains by applying the concept of identification of difference between local versus connecting traffic. Point to point traffic contributes to only 50 per cent of the traffic. The rest 50 per cent comes from connecting traffic. There are very few markets in the world that support a 100 per cent point to point model. We carry higher yielding local traffic and complement it with connecting traffic.