“AI can help answer all the questions we have every day,” says RMS/Accelya’s Ben Druce: “What are my competitors doing? What's driving demand on this flight? Who are you as a consumer?”
The ability to integrate technologies such as artificial intelligence and machine learning into the airline industry’s traditional processes and legacy systems are changing the practice of revenue management.
At least that’s the promise airlines are hoping for.
To a large extent, that promise has been steadily becoming more true for years. AI tools are commonplace throughout commercial aviation as well as most major industries that touch any kind of digital sales and customer experiences.
But with increasing demand that airlines enhance their data and systems – getting a better sense of what’s possible and necessary now to where AI is headed a year (or even five years) down the road, being able to separate “actionable” from “hype” becomes more of a challenge. We checked in with Ben Druce, VP, Sales, for Revenue Management Systems, an Accelya company, to get his take.
Kambr Media: What's the state of AI in airline revenue management?
Ben Druce: Right now, AI is in its infancy. A lot of it is theoretical in terms of wondering how it can add value to airlines, specifically in the commercial areas, including revenue management. But all of the vendors are pumping more investment into it. Everyone can see that there's a lot of opportunity there, but no one really knows where it's going to land and what it's going to look like.
AI is being used by a lot of industries. It's expensive to develop AI and it’s natural that most of the advancement is being promoted by tech companies themselves. For example, Google is spending $20 to $30 billion on AI projects. The airline industry doesn't have that level of capital to invest into R&D.
Should airlines – and related industry vendors – look to companies like Google that are from outside the traditional airline vendor relationship?
Ultimately, the airline industry can leverage what companies like Google develop and build. It doesn't make sense for every vendor and every airline to build their own AI when there could be a selection of AI tools available that can be leveraged and tapped into without spending billions of dollars. That's where it's going to go.
How do you expect the emergence of AI programs to impact revenue management capabilities?
The use cases for AI within revenue management will certainly be more complex.
When airline revenue management first evolved in the ‘80s, the concept was to use mathematical models to automate a lot of those decisions. Even then, the idea was that automation would allow humans to concentrate on where the real revenue opportunities were. The goal was to have 90 percent or more of the inventory automatically controlled.
Things have changed a lot in the industry over the past 20, 30 years. Revenue management isn’t just looking at bookings in a certain fare class to make a decision. It’s about looking at competitive fare information, look-to-book information from websites. Revenue managers are looking at event information. They're looking at ancillary sales.
AI can interpret and process much larger quantities of data, and now that technology has caught up in terms of processing big data, big lakes of data.
Access to all that data allows us to know a lot more about who you are, and we also know a lot more about what's happening in the market. AI can help answer all the questions we have every day: What are my competitors doing? What's driving demand on this flight? Who are you as a consumer?
You can have a better understanding of the offering, though not necessarily the price of the seat, even as we do have greater insight around that.
Is there any more room for airlines to be creative in developing new sources of ancillary revenue?
There’s always room for more creative ideas on new ancillary opportunities. It comes down to understanding what consumers want, or think they want, and how much they are willing to pay for that product or service. Ultimately the consumer needs to get value out of the ancillary proposition. What’s next for ancillaries? I think you’d get a pretty good idea if you talk to Ryanair!
What are the challenges revenue management programs are experiencing right now and how does tech begin to address those issues?
Typically, revenue management has always been held back by technology. And a lot of airlines have very old technology. It's cumbersome, so, that technology now is beginning to catch up with what revenue management has been wanting to do for many years. For example, offering dynamic pricing for ancillaries. That's only just becoming a reality.
As for addressing the challenges, the practice of revenue management, network planning, sales marketing, digital, all work fairly separately with each unit making its own decisions. AI could bring all of those areas together and can make commercial decisions more seamlessly. Everyone has their own data and information across all of those different commercial areas. It's not just revenue management, it's a broader look at the whole commercial function of an airline.
There has been a great deal of investment in travel technology, both within the aviation industry and outside. How does RMS/Accelya approach funding new tech – does the company focus in-house or does it invest in startups as well?
RMS has recently re-branded under the Accelya umbrella. Accelya concentrates our spending on technology in-house as a business, but also pursues acquisitions of innovative start-ups where it makes sense. Research and development is a key area of re-investment for Accelya as airlines look to their technology partners for the next frontier of revenue management capabilities. Given the current level of R&D funding, there will certainly be exciting technology transformations over the coming years.
How has the company evolved amid all this accelerating change with regard to tech?
Like any business, it needs to adapt and evolve. Otherwise, you get left behind. We’re always one or two steps ahead of the competition, which we've always been really proud about. And we intend to stay that way.
We do that primarily by listening to our customers. We understand what they want, what they need, what's a challenge for them. And that's how we provide the right solutions to them.
But our vision and our direction is not going to change. Our revenue management solutions are all about offering the best and most complete information and modern tools that allow airlines to effectively compete in the current air travel marketplace. We're going to continue to do what we've always done and provide the best possible solutions to our customers at any given point in time.