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18 Feb 2017

What It Takes to Be a Leader in Airline Revenue Management

Wall Street has been famous for paying highly-analytical “rocket scientists” millions in annual compensation to identify lucrative trades and to place high value financial bets. Arguably, airlines have an equivalent function in revenue management where complex algorithms are used to maximize revenue need to be managed, adjusted, and continually refined; this analytical function is worth more than $10 million a day at the largest airlines.

However, the leaders in airline revenue management do not tend to be highly paid, super analytical rocket scientists. First, they are not normally compensated anywhere near their value to the airline. But also, rather than hiring such mathematically-oriented “rocket scientists,” airlines more often appoint managers with proven business management skills to the vice president or director of revenue management position. Revenue management leaders are practitioners, not theorists; integrators, not lone wolves; business/commercial oriented, neither creative marketers nor mathematical whiz-kids; strong recruiters/team builders, not individual fame-seekers.

Let’s look at the profile of the VP of revenue management position at a major airline during its decades-long leadership in the evolution of revenue management.

The Beginning: Change Agent

The new VP of revenue management, is an executive from the finance department, where he was responsible for budgets and financial analyses of initiatives in all commercial and operational functions. He had an established relationship with executives across the airline, in commercial, finance, and operational functions. He was charged with bringing new analytical capability to a staff with largely operational reservations experience – analytically-based RM was new to the airline. Rather than implementation of the most sophisticated analytics, focus was more on low hanging fruit: what are the most basic steps toward inventory management and overbooking? Still, change was tough on the existing employees; people and processes were changed dramatically. The VP was not well-liked and once the hardest work was over, he moved on to another function needing a major overhaul.

Full Article: https://goo.gl/LHL4qm

Full Article: Mercator News Room

Source : Mercator News Room

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