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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