May 10, 2020
Revenue management in airlines and COVID-19

How foretelling was REM’s words back in 1987 when they sang: “It’s the End of the World as We Know it”. This certainly rings true today for the aviation industry during this time of COVID-19 and the devastating impact on Airlines.

Interestingly, quarantine was first introduced in 1377 in Dubrovnik on Croatia’s Dalmatian Coast. It is not known why 40 days was chosen as the length of isolation time needed to avoid contamination, but it may have derived from Hippocrates’ theories regarding acute illnesses.

Another theory is that the number of days was connected to the Pythagorean theory of numbers. What is known is that we have all become accustomed to new terminology and words like social distancing, self-isolation, data-based forecasting and flattening the curve became part of our everyday vocabulary.

So the question might be, what has all the above to do with revenue management in airlines and particularly with airlines preparing themselves for Day 1: the life after COVID-19.

Well, quite a bit so let me break it down

  1. Social distancing is going to be top of each passenger’s mind for a very long time to come. This is likely to result in airlines maintaining safe distances onboard. As a result some airlines will offer far fewer seats than the aircraft’s capacity. Using revenue management for airlines techniques in maximising RASK will be pivotal for flight profitability
  2. This is the age of sanitised travel which will lead to longer turnaround times. This will result in lower fleet utilization and significantly increased costs per ASK.  Maximising revenues per flight will be essential and revenue management is the tool to help manage the situation.
  3. Data-based Forecasting is also an essential part of revenue management for airlines and one of the main drivers for optimisation and revenue maximisation which will also take into account the reduced capacity due to points 1 and 2 above.
  4. Flattening the curve is not only important for COVID-19 but also airlines. Effective revenue management is the tool to flatten the seasonality curve by moving price-sensitive passengers to lower demand flights with the opening-and-closing of booking classes.
  5. Significance of numbers.

Revenue management for airlines

We’re also passionate about numbers and particularly about increasing the revenues of our Aviator clients. Do you also know that we have sales and support offices in 5 countries and that Aviator is integrated with over 16 PSS systems? Oh, and we have 22 consecutive years of profitable operations behind us.

A final note

Lastly, best-practice companies will use this down period to begin planning their recovery strategy so they are fully prepared when the all-clear is given and demand takes off. No-one knows how long this will last, but there will eventually be a recovery and rebound.

Cooperation, support and revenue management in airlines are key ingredients to the recovery process. We have  the in-depth experience and expertise in airline revenue management to help you navigate and adapt to the realities of the post-corona era.  Why not contact us today to talk about how Aviator can help you.

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