Can Airlines Wing It Without Revenue Leakage?

Summary

The complexity of airline operations leads to various opportunities for revenue leakage. Interline agreements and partnerships further add to the problem. Plugging revenue leakage hence calls for a completely different approach. Formulating the problem is the key to arriving at an effective solution.

While multiple factors cause revenue leakage, it’s important to understand the entire revenue production and realization value chain to identify the sources of revenue leakage. There are three stages in the revenue production and realization value chain:

• Product creation (network planning and scheduling)

• Value assignment and distribution (revenue management)

• Channel management (sales)

Under each stage, there are a slew of actions ranging from fleet / schedule planning to forecasting to sales planning. Revenue leakage can occur at various stages when any one of these actions are performed. By identifying all the sources of leakage across the value chain, the problem of revenue leakage can thus be formulated.

Once the problem is formulated, revenue integrity solutions, automation and analytics can help eliminate disparities between booked and actual revenues, streamline the flight reservation process, increase revenues and improve passenger load factors and yield. In the process, airlines can significantly restrict revenue leakage and maximize recovery of revenues.

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