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COPYRIGHT 2001 Penton Media, Inc.
Airlines spend millions on sophisticated revenue management systems but still let millions more escape owing to lack of revenue integrity
Revenue leakage--the gap between the revenue that airlines book and the amount that they eventually receive-is a big problem. Preventing it is especially important in a traffic downturn. And airlines' long-standing inattention to that leakage while simultaneously blaming external forces for all profit problems is disingenuous.
Slowly, revenue managers are acting to stop the drain, developing revenue integrity software designed to enforce ticket- and fare- related rules from the time a PNR is created. Nick Bredimus of Bredimus Solutions in Dallas declares, "Airlines can switch it on very quickly. If senior management knew it was available and saw how simple it is, they'd want someone shot" for not installing it. He claims that depending on the size and extent of application, "within a few months they can save $50-$100k and many of them several million dollars. There are no breakthroughs in revenue and yield management offering that payback."
Marilyn Hoppe, who has directed yield managers at several airlines, agrees. "It's the cheapest thing available, costing perhaps a few cents per segment, yet if you can free up one seat [e.g., by canceling a subminimum connection that a traveler can't make] you could produce hundreds of dollars in revenue [from the then-freed seat]." Moreover, according to Ken Otwell, co-creator of Calidris revenue integrity software, "A major advantage is that if you eliminate the bad [e.g., fake or duplicate] bookings, you reduce CRS booking fees. You can justify...
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