The revenue management side of an airline is a mix of art and science. There are trends to study, massive volumes of historical data to work with, competitive numbers from other airlines. And then there’s the wildcards. Random spikes in demand for any particular flight can come along and completely trash the investments airlines have made in planning and predicting. But what if some travelers are willing to be flexible, changing their flight time to help the airline and even get paid for that move? Traditionally those changes have been handled almost exclusively at the airport. In recent months some airlines have called passengers in advance if a flight was heavily overbooked, often the result of cancellations or aircraft swaps. Now, however, United Airlines wants to try automating the process with some help from Volantio YieldBoost.
The concept is simple: A few days out the system can look to see which flights are booked above what the expected last minute sales would typically bring. If there are travelers booked on cheaper tickets the system would offer them the swap to an alternate flight and whatever compensation the company deems appropriate. When passengers accept they are moved to the alternate and the inventory is freed up on the primary flight.
Assuming the system works correctly everyone wins:
- The airline makes more money, assuming the predictive data is correct and those last minute seats sell. And it does so while not pissing off either the discount fare customer – they were more likely flexible anyways and buying the cheapest seat, not necessarily the specific timed flight – or the premium customer buying last minute, high priced seats. The move also
- Gate agents should see a reduced workload as fewer flights make it to the gate in an overbooked state. Rather than dealing with a last-minute rebooking, where fewer alternatives are available, the agents simply process the flights that are now less likely to be overbooked.
- Passengers are more likely to be able to buy seats on the flight they want/need and the “displaced” passenger get the comp with far less stress than racing to the podium at the airport or worrying over which reroutes are available (or, for truly first world problems, if that reroute involves a middle seat). It also opens up flights prior to the originally booked trip as a reroute option, something that almost never happens at the gate (I got it once in 20+ years).
- Added bonus: The rebooked customer is more likely to travel on United again in the future because of the voucher they receive. The system also encourages direct booking as only reservations made through direct channels will be eligible for the Volantio offers.
Higher load factors today add challenges to the black magic that is Revenue Management. This new technology should result in higher load factors overall, but in a manner that exposes the airline to lower risk of losing out on a high-paying customer. That’s good for the airlines while the increased crowds on board are arguably bad for passengers. Though at this point expecting anything other than a full flight most days is probably a mistake.
Tiger Airways, Qantas and Alaska Airlines are all in line to join the party and there are other vendors (e.g. Avisell) working on similar technology so presumably other airlines are also in play. The Volantio/United deal is a trial run for now to see just how well the system does at identifying flights and passengers to target for reaccommodation. Maybe it sticks around or maybe not. But given the odds that it increases revenue I’d bet we see more of it going forward, not less.
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I love this, at least conceptually. I’d consider a lot more changes if I wasn’t already at the airport when they announce they are looking for volunteers. If I’ve already checked out of a hotel, turned in a rental car, maybe even gone through immigration then I need a bigger payoff for the inconveniences compared to if I could have been waiting comfortably (or better yet, still exploring).
I think you’re darn close to the ideal target, Becky. With flexibility and willingness to do just about anything else but sit in the terminal the comp voucher amount could actually go down rather than up. And you’d be happier with the shift overall.
It is a very fine line to walk in terms of making sure the numbers line up, but I think the concept will be successful in conjunction with traditional VDB/IDB, not a wholesale replacement.
Good explanation in this article.
likely beneficial to me. I always book very far advance in dirt cheap L/K/G fare buckets, but at popular flight times with flights departing with Y3 or less, and usually take advantage of the Same Day Confirmed Change feature to switch to another flight based on my mood that day.
This new partnership would actually pay me for doing something i already do for free for the airline.
A flight at Y3 doesn’t necessarily need this, so don’t get too excited too quickly. Overbookings remain relatively rare, not the norm.
I said Y3 or less. But regardless, Y>0 is no indication the flight isn’t already oversold.
There was once at CLT awaiting my CLT-NYC flight on Memorial Day that I was so flexible (and NYC-airport agnostic) that I was hoping to keep stacking VDB vouchers by going from one flight to the next. Sadly, only got 1x$200.
sometimes comp vouchers are amazing deals. I took a $200 AA voucher simply to agree to arrive 1.5 hours later, at an alternate airport (LGA instead of JFK, big whoop)
How does this jive with currently charging for standbys? Instead of paying pax to change, some already vol… https://t.co/vsdRbdexNP
I don’t know, maybe in some circumstances. But $250 isn’t going to cut it in most unless the delay is less than a few hours, $500 or $1000 on the other hand may tempt.
Maybe, maybe not. In many cases today $250 is already enough and that’s with likely suboptimal reroute options and having to stress about it at the gate. It also creates a situation where the airline has way more control over who receives the offer which should further help things.
The passenger volunteering on JFK-LAX who is connecting on to SYD is way less desirable a bump candidate than the traveler just going to LA. And if the airline knows about the problem in advance it can offer an earlier flight, not just a later one.
I also expect that this will be used more on routes where there is frequent service (i.e. the move is only a couple hours) than on the 1x daily flights. But the airlines are also more aggressive about overselling on those routes, too, because they know it can be better handled.
I like the concept of this. I wonder how it will end up working practically. I assume the payout offer of vouchers will be lower than the at the gate level. Most of the time I hear them offering around $200 voucher. I generally find that to be too low given the current pricing on most flights.
I believe (and the airlines hope) that people notified in advance rather than at the gate will be more amenable to lower payouts. Also, it doesn’t have to be just a voucher. Depending on the vendor involved other bits can be included in the offer (e.g. Avisell can offer a ride to the airport, meal voucher, lounge pass, etc.). There are lots of ways to move the needle on this and the industry is just starting to scratch the surface of what’s available.
I could even see some people being willing (and offered) to take a connecting flight from a direct flight if the payout is enough. This is really cool and agree that this is just the surface of what RM will be able to do!
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