Powering Modern Commerce - · PDF fileFrom Leg to OD to POC RM ODC LEG RM LEG RM SBP OD RM POS AVAIL ... • OD & Booking curve forecasting ... each customer with the offer that will

Powering Modern

Commerce

Richard Cleaz-SavoyenDirector, Revenue Optimization – Air Canada

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Air Canada:

Transforming an Iconic Brand

into a Global Champion

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A Glimpse at Air Canada

200 Destinations 1800 Flights/day381 Aircraft

14.7B$ Revenue

45M pax

30,000 Employees Competitive

Landscape80th Anniversary

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The Air Canada (Int’l) Network in 2008

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The Air Canada Network in 2017

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The 2017 International Expansion

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Leveraging Geography & Hubs to maximize

6th freedom traffic potential

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Creating a Global Champion

New Aircraft, Livery & onboard Product

787, 737 & C-series entering the fleetFuel efficiency, increased comfort & rangeInternational Business class & Premium EconomyBest in class customer journey

New Revenue Management Systems

PROS OD3 implementedPROS Availability ServerJourney Data & Point of Commencement

Leveraging our hubs

Significant International Capacity growthBuilding Toronto Pearson as global hubSpecialized hubs at Vancouver & MontréalPower 6th freedom growth

Alliance & Joint Venture

Founding member of Star AllianceA++ Joint venture

Air Canada Rouge

Leisure carrier flying to Europe in the summer and the Sun Markets in the winter

Customer Service

Building a global brandService ExcellenceSkyTrack Four Star CarrierCulture Change

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The AC RM & Availability Landscape:

Modernization in the Works

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From Leg to OD to POC

RM ODC

LEG RM

LEG RM

SBP

OD RM

POS

AVAIL

OD RM

POC

AVAIL

JDBuilding a connecting

network

Increasing LFs

& hub connectivity

at YYZAlign OD RM & Avail

with Customer

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Benefits and Challenges of the O&D world

CHALLENGES

• Dual Organization Leg/OD

• Forecast Calibration & Accuracy

• Human factor

• Recruiting & Training

• Granularity

• Data, O&D Reporting & KPIs

BENEFITS:

• Daily pricing feed

• OD & Booking curve forecasting

• Local vs Connecting tradeoffs

• POS Fare differences

• Exchange rates & surcharges

• Network Optimization

• OD level availability adjustments

KEY LEARNINGS after 2 years of O&D RM

#1 Forecast is key, along with coordinated calibration @ network level

#2 Never underestimate Change Management & continuous training

#3 Well defined users’ workflows are a must

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Reaching out to our customers

PROS OD3

PROS RTDP

PAV CLOUD

PSS

Business rulesBid-Prices

Daily Fares

GDS

OTAs

WEB

Call Centers

API

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Modern Commerce in the Airline Industry:

Achieving consistency & alignment across

the entire commercial process to present

each customer with the offer that will allow

capturing his/her maximum WTP.

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The need to go Beyond traditional RM

Unless presented as distinct offers adapted to each customer’s need and WTP, bundling

together selected attributes (seat, upgradability, amenities, flexibility…)

Dilution

RM

Perfect

average

value for the

next seat

Selling the exact same product simultaneously at 2 different prices is risky

WTP

Lost sale

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Multi-dimensional Segmentation

Airlines’ responses are shaping-up to capture the entire WTP:

Branded Fares or Fare Families

• Launched by AC in 2005

• Simultaneous offer of different

products at different prices

• Target distinct demand segments

• Not requiring information on the

customer

Personalized offers

• Target each customer

individually with relevant

offers to improve

conversion rates

• Leverage CRM capabilities

• Understand the interest &

habits of individuals

• Estimate WTP based on

history of purchase

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The key role of Distribution & E-commerce in

sustainable profitability

LanguageShopping

habits

Product Offer

Reaching out to more

customersCulture

Forms of payment

e-Devices

Airlines need to become fast, efficient and exact:

slow & approximative is not an option

• Air transportation has entered the era of

“e-everything”: shop, book, pay, change, check-in,

on-board purchase, connect, send feedback …

• The industry needs to modernize its distribution

processes & technologies to support this fast

transformation

• Create a seamless digital experience

consistent across channels

• It also requires adaptability to the customer’s

preferences and habits as we expand to serve

new countries & destinations and aim to reach

out to more customers

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DISTRIBUTIONE-COMMERCE

SALES

A Seamless & Direct customer experience

across all channels & devices

REVENUE

MANAGEMENT Rethink how the

development of these

functionalities affects RM

techniques & user skills

Merchandizing

PAV Cloud

JD & POC

Obsolescence of caching

Trade education

NDC (AC 2006)

Merchandizing

Instant calendar search

Common platform for all devices

Optimal Itinerary display

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… requires re-engineering revenue management

Packaging & discounting…

at what price?

• Optimal bundle pricing?

• Optimal discount?

• What is the value of integrating

ancillaries & branded fares in

the forecasting and

optimization processes?

• Intuitively, a continuous

demand curve would

suggest…

• Continuous Dynamic Pricing?

• Towards classless Revenue

Management?

Increase accuracy to be

more pro-active

• Update forecasts based on

advance booking trends

• Capture Customer Choice

• Integrate new data sources

predicting velocity and yield

spikes (Social Media, weather, news…)

+ +

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We are very lucky to evolve in a

domain where advanced science

is intrinsically embedded in our

commercial practice.So we are in good hands

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Thank you.

Merci.

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