Kingsbury by lanyuehua

VIEWS: 4 PAGES: 19

									How a small airline copes with
  Change as a way of life

  2001 Agifors Reservation and Yield
      Management Conference

             Thomas Kingsbury
              Blackcreek, Ltd.
             As an OR person
• I tend to focus on the high tech stuff
  –   Do we have the perfect Forecasting tool?
  –   Are we using the right Allocation method?
  –   How is the overbooking?
  –   Exactly what is our precision?
• So does the airline
  – The first question when a system is installed is,
    “How accurate are the forecasts?”
                    AGIFORS Bangkok, 2001               2
                    The focus
• We need to focus on what makes the system work
  for the airline
  – Is the data from the Reservation system correct
    (GIGO)?
  – Is the RM system doing what we want it to do? (What,
    exactly, do we want it to do?)
  – Is the RM system keeping up with the changes within
    the airline?
• How does the RM system continue to function?
  – Change is the only constant in the airline business

                     AGIFORS Bangkok, 2001                 3
    What should the system do?
• One airline said it had been looking for an RM
  system for 5 years -- still trying to buy ‘the perfect
  system’ (which doesn’t exist)
• What are the airline’s goals?
   – More profit?
   – Higher load factor?
   – Keep everyone happy; the frequent flyers, group sales,
     marketing, and ‘the most important customer’?
   – Sell the right product at the right price to the right
     person at the right time?

                     AGIFORS Bangkok, 2001                    4
An off-the-shelf system can work
• Most small airlines do not have the time,
  expertise, or money to develop their own RM
  system
• Most smaller airlines use a system developed by
  or for another airline
• Will this system work for you?
• Does your airline know what it is getting?
• How much ‘blue sky’ is involved?

                   AGIFORS Bangkok, 2001            5
Any RM system has the potential
     to help an airline to:
•   Clean up and review its data
•   Determine its goals
•   Open internal communications
•   Determine what makes it profitable (The
    President/CEO still says ‘We have to increase the
    Load Factor!’)



                     AGIFORS Bangkok, 2001              6
              A vendor system
• The airline has to know:
  – What it wants
  – What the system does
  – What the system requires in the way of
     •   Market analysts
     •   Support
     •   Data
     •   Management
     •   Dedication

                      AGIFORS Bangkok, 2001   7
              A vendor system
• How changeable is the RM system?
  –   Is the system manageable?
  –   Who ‘owns’ the system?
  –   Can the airline make changes to the system?
  –   Is it well documented?
  –   Will it stay up-to-date?
  –   Does it work error-free?
  –   Who fixes the ‘bugs’?
  –   What is the cost -- fees and operating costs?
                    AGIFORS Bangkok, 2001             8
            A changing airline
• The airline business changes drastically and
  rapidly. Does the RM system?
  –   Who specifies the changes?
  –   Who makes the changes?
  –   Who tests the changes?
  –   Who suffers when the changes don’t work?
  –   Is there a dedicated team to work with change?

                    AGIFORS Bangkok, 2001              9
 Many changes to an RM system
• The RM system must keep pace with the
  airline. Recent changes include:
  –   Alliances
  –   Internet sales to a specific campaign class
  –   Code share -- multiple types
  –   Flexible aircraft/moveable curtains
  –   Y2K (remember that?)
  –   Opening up lower classes



                       AGIFORS Bangkok, 2001        10
Conceptual changes to the airline
• Who is in charge here, anyway?
  –   The market analysts?
  –   The OR department?
  –   The IT department?
  –   The vendor?
  –   The marketing department?
  –   The group department?
  –   Nobody/everybody?

                   AGIFORS Bangkok, 2001   11
 Changes -- Alliance and classes
• Classes were changed
• Descriptions, uses, and nesting order
• Nesting was not in average fare order -- fares are averaged
  by class over the past 4 months
• A change had to be made in the Reservation system to
  change the nesting order by flight/market
               Nested not in fare order                              Nested in fare order
    Class   Fare   Demand    Non-nested    Nested     Class   Fare     Demand     Non-nested     Nested
                               AULs        AULs                                     AULs         AULs
     Y      1000       10            10       100      Y      1000          10              10     100
     B       700       15            15        90      B       700          15              15      90
     Q       300       40            20        75      M       600          35              35      75
     M       600       35            35        55      K       500          20              20      40
     K       500       20            20        20      Q       300          40              20      20



                                          AGIFORS Bangkok, 2001                                           12
                              Low load factors
• With low load factors, the lower classes were
  automatically closed when the system was first installed
• Too many complaints, so an automatic method was
  installed to open all classes in this situation

                   Normal Allocations                            With lower classes opened up
    Class   Fare    Demand    Non-nested     Nested      Class   Fare   Demand    Non-nested    Nested
                                AULs         AULs                                   AULs        AULs
     Y      1000         10             30      100       Y      1000        10           30      100
     B       700          5             15       70       B       700         5           15       70
     M       600         15             45       55       M       600        15           45       55
     K       500         10             10       10       K       500        10           10       50
     Q       400          0              0        0       Q       400         0            0       50
     H       250          0              0        0       H       250         0            0       50
     E        50          0              0        0       E        50         0            0       50




                                             AGIFORS Bangkok, 2001                                       13
                Moveable curtain
• The moveable curtain was introduced and had to be
  controlled/optimized
   – The configuration allows for 6 seats/row in coach and 5 seats/row
     in business
   – Then the planes were re-configured
   – How to solve this? A table of possible configurations was created

   Config #    Eqpt Type     Capacity 1    Capacity 2   Option
   101         AB1           15            101          A
   102         AB1           20            95           A
   103         AB1           25            89           A
   104         AB1           30            83           A
   ...
   201         AB1           15            107          B
   202         AB1           20            101          B
   203         AB1           25            95           B
   204         AB1           30            89           B
   ...

                           AGIFORS Bangkok, 2001                     14
             Code sharing (1)
• There are different types of code shares:
   – Hard blocks
   – Free sale
   – Soft blocks
• When operating the flight, the Res system displays
  the airline capacity only (without the blocked CS
  seats)




                    AGIFORS Bangkok, 2001         15
             Code Sharing (2)
• The moveable curtain and code
  share/blocked seats have to be combined?
  – But moveable curtain flights must contain the entire
    capacity to match the configurations
  – The RM system optimized all possible settings that met
    the protection parameters (blocked seats and
    materialization of booked passengers)
  – RM then selected the setting with the highest revenue


                    AGIFORS Bangkok, 2001                16
                  Internet sales
• A change to sell discounted seats for the following
  weekend over the internet
   – Seats are sold in one class only
   – A limited number of seats are allocated for the quick
     buy program
   – A limited number of markets and flights
   – How to restrict sales within the Res system?
      • The class was removed from nesting
      • Minimum and maximum limits were set to specify the number
        of seats to be sold



                       AGIFORS Bangkok, 2001                    17
          Additional changes
• Flights with domestic and international legs
  have different classes
  – Write a separate program to work with it
• Code share agreements change
  – Old hard block agreements become Free Sale
  – There is new demand on these classes/flights
  – What to do about it?


                  AGIFORS Bangkok, 2001            18
          A change machine
• An airline is a change machine
• The RM system has to change with the
  airline
• The airline’s concepts have to change
• And the forecasts still have to be as good as
  possible!


                 AGIFORS Bangkok, 2001        19

								
To top