When you are running an airline or work in some part of the airline industry, you need to know how revenue management works. You may only run or or two flights a day for a very small airline, or you may be on the client side where you need to answer questions about pricing and booking. There are some options below that explain how you can use airline revenue management to your advantage.
How Are Prices Set?
Airline revenue management software is used to set prices for each route. The plane takes so much fuel, it carries so much weight, and you have staff members on the plane who must be paid. The route has a specific cost, and each seat on the plane has its own price because of how desirable it is. Passengers pay more for first class than they do for coach, and a window seat can cost a bit more than a middle seat or aisle seat.
The revenue and accounting system takes all these things into account to set the price for the flight. You will learn how much money you have made from each passenger, and you can balance the cheaper seats with the more expensive seats. If you are making a profit, you know that you are doing well. If some seats are not filled, you can lower their prices. If all your cheap seats are filled, you may need to raise the price just a bit. You can easily determine how much more money you can make on each flight using projections from the software.
How Are Employees Paid?
The airline revenue management system that you choose allows you to pay your staff properly, record who was on each flight, and how long each pilot was in the air that day. You can abide by FAA regulations using the software, and you can send all the information to your accounting program or accountant so that payroll can be reconciled. Remember that you are taking payroll out of each flight. You can assign all the other money to different parts of your company as you see fit.
Are Routes Effective?
You may find that some of your routes are simply not effective or efficient. You cannot continue to fly routes that are not making money or not making enough money. You need to account for how much wear and tear you are putting on the planes, and you also need to hold back money for capital expenses or even investments. Each route that is not effective is taking money away from your company. Remove that route and replace it with a route that makes more money according to the projections created by the software.
You can print reports about your flights and routes at any time, and you can even use these reports to make projections about what your company should do next. If you want to know how much you are growing, you can read that information in your reports. Allow the program to show you how much money you can make in a year, and use the reports to see how much money you made last year as a comparison. You can operate using growth ratios and goals like growing 5% per year.
You can easily share information from the program with members of your staff or investors at any time. You can get a fresh perspective from these people as they read over your numbers. Plus, you can ask your staff if they have any ideas when they look at these numbers. Also, you can make reports to send to your staff when they need to compile their own figures when managing things like vendors, fuel, and airplane maintenance.
Your airline can make a lot more money if it is using a revenue management system. You need to know how much money you are making on each flight, and you should start thinking about how you can maximize each flight. You can quite literally set a price for each seat on a plane, and you may begin to remove routes that are not making money. The software helps you set aside all the money that is needed for salary, taxes, and maintenance. Plus, you may begin to expand your airline as you make more money on each takeoff.