Volatile fuel prices have replaced exorbitant fuel costs as a major focus for airlines, followed by yield and revenue management.
Those were the top priorities identified by carriers surveyed by Sabre Airline Solutions. Roughly 192 participants from 90 airlines participated in the company's latest survey.
Roughly 57% of respondents cited fuel price fluctuations as the top priority during the next 18 months followed by 52% identifying revenue and yield management as their major focus.
Sabre Airlines Solutions VP marketing Gordon Locke says that while the focus on profitability is obviously not new, "it is arriving at profitability in a different way". The last survey of this type conducted by Sabre in 2007 showed a primary focus on cost reduction and cost management, with close to 30% of respondents mentioning revenue. "But you had very few mentioning both", Locke says.
Now to hear that "sixty-seven percent have an equitable focus on revenue and costs that means they're getting even more serious about their profit margin", Locke explains. A specific question about profitability asked if airlines were more focused in increaseing revenue, decreasing costs or if they planned to focus on both equally.
From the end of 2007 until now Locke says roughly 24 airlines have contracted Sabre for various revenue management solutions. Some of that is broken down into services says Locke, so one customer may just need competitive revenue management, while someone else is interested in O&D revenue management.
"It's a big change", says Locke. The years prior to the end of 2008 were big operations sales systems years. "Now what we're selling a lot of and what customers are consuming is a combination of consulting services on the cost and revenue arena but also the SabreSonic Customer Sales Solutions because that's where it all happens," he explains.
Other survey findings show issues that carried a higher priority in previous years including merchandising and multi-channel distribution were identified as lower priorities in the latest survey. About 7% of respondents citied merchandising and ancillary revenue as a top priority. Locke reasons that's a combination of having many issues to prioritise and a large number of airlines either planning to introduce merchandising and ancillary revenue programmes or already have those schemes in place.
Locke points out fulfilment could emerge as a challenge for airlines utilising merchandising techniques. "If you're going to do merchandising, it is obviously part of your brand experience and if you don't do it across all channels you create really an inequity in your customer experience." He explains a lot of "channel jumping" still exists where customers book some travel online while using travel agents for other trips.
"If the experience is so drastically different on the same airline it is likely today because the fulfilment is difficult," Locke says, adding Sabre has adopted a strategy of offering fulfilment tools from ticketing to payment to the actual delivery of the product.
Rounding out the top five priorities the participants considered key during the next 18 months were competition, alliance and consolidation at 38%, customer loyalty and retention at 27% and labour management at 22%.