With the penetration of hybrid and low-cost carriers, airline competition is intense. Coupled with declining agent loyalty and demanding customers, airline profit margins were less than 3% in 2015. At the same time, the industry as a whole continues to grow rapidly.
So, the question is: What can airlines do to increase revenue and market share?
They can start by conducting sales analysis and examining airline and agent performance across markets. Once airlines know where they stand, they can identify the best opportunities for growth and capitalize on them.
This is what that process looks like:
Benchmark Airline Performance with Respect to Industry Performance
Benchmarking airline performance against industry performance enables gap identification. It’s how airlines can know potential areas for increasing revenue and market share. This way, airlines have a clear picture of where they’re performing well and where there is room for improvement.
For example, by analyzing performance on specific routes, airlines can compare O&D revenues and market share with the competition. For routes where the competition is winning, airlines can conduct an investigation to determine why that’s the case and pivot accordingly.
For each market, airlines should measure their sales performance as well as agent performance. Such analysis provides key insights about an airline’s market potential across the globe.
It’s not enough to know how profitable an airline is. Rather, airlines must determine where revenues are increasing and decreasing within specific markets and act accordingly. Air carriers must also look at where market share is increasing and decreasing. This will allow airlines to determine if they’re above or below industry standards—and where they need to improve.
Of course, benchmarking airline performance necessitates the use of advanced technologies. Thai Airways, is a perfect example of how airlines can boost revenue by being proactive and leveraging actionable intelligence. Specifically, Thai Airways began utilizing airline sales intelligence technology to monitor route and market performance, explore solutions internally and with travel agencies to enhance performance, and extract insights to design better sales campaigns.
Map Agents That Are Driving Growth
After benchmarking airline performance in different markets, airlines must pinpoint which agents are helping the company increase revenue and market share. Focus on incentivizing these top agents to do more for the airline, as these are players that can deliver more in the immediate future.
Next, airlines should analyze top agencies that are growing faster than industry revenues, but not aligning with growth levels for the airline (i.e. the airline’s sales growth through that agency isn’t growing as fast as their overall sales growth).
For example, Ctrip, China’s largest provider of travel services, achieved 46% year-over-year revenue growth from Q1 2016 through Q2 2017. If an airline’s performance on Ctrip isn’t matching that revenue growth, it’s time to explore solutions to improve sales effectiveness through the travel agency.
In addition to current performance, airlines should map travel agencies based on potential, like those that operate in emerging outbound travel markets, like Brazil, India, and Indonesia. This way, airlines can predict which agents will bring them more revenue and market share in the coming years.
By segmenting agencies into such categories, airlines can figure out which ones to incentivize. This allows airlines to give targeted incentives to the agents that are already bringing them growthor have the potential to do so in the future, thus improving sales. It will also improve agent loyalty, which can help airlines achieved sustained success in markets over the long term.
Plan for Future Sales
Airlines have the ability to anticipate the future of the market using analytics. This can help carriers capitalize on future revenue opportunities and minimize revenue leakage through increased efficiency.
Airlines can leverage this information as they will have an understanding of the key performance indicators that will dictate future results as well as where new opportunities can be captured. By looking at trends across routes, markets, and agencies, airline companies can proactively plan actions to tap additional revenue. They can see where they can most likely improve revenues, increase agent loyalty, and gain more market share.
A great example of an airline that anticipated future demand correctly is WOW Airlines, an Icelandic carrier. After researching the interest in tourism to Iceland from North America, and examining the lack of affordable flights to the country, WOW began offering low-cost flights from American cities to Iceland. Since WOW began offering these flights in 2010, American tourism to Iceland has skyrocketed. From 2014 to 2015, it increased 37%, largely thanks to WOW Airlines. The company has employed similar strategies in other markets, which explains its almost 50% increase in passengers in 2016.
Find a Partner You Can Trust
Airlines can’t do all of this alone. They need a partner who can provide them with intuitive technologies to increase revenue and market share.
At Accelya, we built eSmash, an easy to use, web-based tool that enables airlines to anticipate, adapt, and accelerate their business in a fast-moving, competitive industry. eSmash offers airlines market information, sales analysis, and forward analysis to drive revenue growth and achieve greater market share. In the fiercely competitive airline industry, eSmash can make all the difference.