Alex Mans, Founder and CEO of FLYR Labs, explains the value The Revenue Operating System® can bring to an airline.
Why is The Revenue Operating System® crucial to the industry recovery?
In the last two years, all the data that feeds into an airline’s traditional revenue management system has been too noisy or sparse.
There have been new entrants, restructured carriers, and revamped networks. The market has been highly volatile and extremely competitive. You can’t rely on year-over-year averages or historical patterns.
Moreover, airlines have been capital and resource constrained and revenue management has not been top of the agenda. So, an airline’s understanding of its revenue potential has been getting worse when in fact its revenue potential is more important than ever.
Carriers need better forecasts and better pricing power. They also need more flexibility and improved retailing and distribution strategies. FLYR’s Revenue Operating System, Cirrus, gives them all of that and more.
What makes Cirrus stand out in the market?
Cirrus is a Revenue Operating System and not just a revenue management system. This is because it is not simply about optimizing revenue.
Its forecast accuracy and complementary decision support functions can help an airline plan its network, suggest the best way of spending marketing dollars to stimulate demand, maximize ancillary revenue opportunities, optimize for air cargo, and even give executive leadership reliable insights into what the quarters ahead will look like.
It is the glue that aligns and binds commercial decisions.
Tell us about the product features.
Many years ago, we set out to create a consumer product. But after working with a few airlines, it was obvious that airlines faced a huge gap in revenue management capability and needed a modern approach to unlock their potential, in particular by leveraging deep learning and neural networks.
We realized there was an opportunity to leverage the huge amounts of data that airlines have to make more accurate forecasts and pricing decisions.
Traditional revenue management relies on bookings and inventory with human analysts dealing with everything else. But in a dynamic market, things change very quickly, and those limitations are a problem.
Cirrus can easily identify correlations in the network, meaning it ingests far more data points than the normal revenue management system—no matter where those data points may sit. It will know if a Boston-Los Angeles flight on a Tuesday morning follows similar patterns to a Miami-New York on a Saturday night. We can drive a ten-fold increase in the accuracy of our forecasts compared with other revenue management systems.
Cirrus also puts more than 95% of prices into the market without requiring human intervention. Normally, it is a human analyst setting prices through simple rules—if a market does this, do that with the price. But Cirrus comes to its own conclusions, trusted and affirmed by analysts, through its artificial intelligence capabilities.
This reduces the workload for an analyst and puts all the data and analysis under one interface. It means the analyst can concentrate on value-added services, such as working with other commercial teams in the airline. We’re now seeing revenue managers at our partner airlines regularly collaborating with scheduling and planning, marketing, cargo, and ancillary revenue management functions.
The end result is a more confident pricing strategy. You get a Venn diagram rather than silos.
How does your business model work?
We are a partner first and vendor second and our business model reflects that. We take the view that we don’t deserve to be paid a penny until we have proven superior results against an airline’s existing systems.
FLYR runs true A/B tests to compare flights that remain under the pricing control of a legacy revenue management solution with those managed by FLYR. Using this comparison, we can measure revenue and load factor uplift.
Is the implementation process difficult?
We do everything possible to reduce friction with implementation, taking only 12-14 weeks once we have access to the data. We bring an experienced team of engineers, data scientists, and domain experts to lead the implementation process, and will even sponsor resources needed by the airline to support. It’s a zero cost to implement model.
This also means the airline sees a return on investment almost immediately. So far, clients are reporting an uplift of about 4% in load factors and an up to 7% increase in revenue. Of course, every airline is different but any improvement in the current market is really significant.
What other factors should airlines consider when deciding on incorporating a Revenue Operating System?
FLYR’s Revenue Operating System enables airlines to maximize passenger revenues, leveraging flight, ancillary, and fare family values. This results in strong revenue strategies, personalized customer experiences, and total revenue optimization.
With FLYR, airlines are unlocking improved performance beyond revenue management, clarifying operational decisions, and unifying commercial strategies across all business functions, using real-time revenue management performance analytics and user inputs all in one user interface.