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Lufthansa Systems’ pricing solution for maximum revenue
ProfitLine/Price Sales Integration takes fare coordination to a new level
Airlines are extremely complex businesses. There are a large number of processes and many internal and external parties involved. However, it all boils down to one target that all airline companies in the world share: making profit. To a great extent, this goal is closely related to the airline’s revenue management and pricing, or to maximizing the airline’s profit by smart market segmentation and fast pricing initiatives. Lufthansa Systems offers ProfitLine, a leading integrated pricing and revenue management product suite.
Pricing is a central element of this process, because it is the final result of the airline’s market segmentation efforts. Booking classes may be well structured, but they will not maximize profits if the fares they represent are too high (turning away customers) or too low (giving away revenues). With ProfitLine/Price, revenue specialists have a state-of-the-art solution on hand that optimizes pricing processes and increases revenues.
Part of the success of ProfitLine is its constant renewal process. Lufthansa Systems is always exploring new functionalities that can help the planner with this increasingly complex job. It is important to observe fares in the market and see what competitors are doing. As most airlines serve foreign markets, they need to have a pricing structure for every country based on the local cost levels and market situation. This is where the new ProfitLine/Price Sales Integration web client comes into the picture.
Pricing coordination between an airline’s headquarters and its international offices is an important task for pricing managers. After all, prices that suit the market are not necessarily what central airline strategists have in mind. For instance, if due to a local economic downturn it may be advisable from a market perspective to stimulate travel by implementing lower fares, head office may oppose this move because it will be hard to lift fares in the future.
Also, if a competitor reduces prices for a specific route during a promotion, the airline needs to calculate very well whether it makes sense to match the low fares or to stick to its fare levels in order not to spoil the market.
If a local office decides to change a certain fare, it needs to file a request with its headquarters. This process has been long-winded and quite intransparent. Now, the new Sales Integration web client supports pricing managers with a number of innovations. Its new, user-friendly graphical user interface makes it easy to work with, reducing training time and costs. Being web-based, it acts as a standardized communications platform for sales and pricing departments, giving planners access to the comprehensive ProfitLine/Price fares and rules database. The solution is integrated with the airline’s deal management, and most importantly, it is part of the pricing workflow rather than a cumbersome separate solution.
For pricing managers at the head office and in the field, the new Sales Integration web client provides even more advantages: It increases pricing efficiency due to its standardized approach. This improves transparency and economic results as misunderstandings between offices, and thus time to market, can be significantly reduced. Deployment, configuration and user guidance are easy and fast, so the airline starts to benefit from the tool shortly after implementation.
Several international airlines have signed up for the new web client already. This is proof to the fact that it is a big step in keeping ProfitLine/Price in its leading market position. Because airlines can do a lot in terms of product quality and service - but industry professionals know: a flight is a flight, and pricing is everything.
FreeFlight by Lufthansa Systems - A dream of future aviation may come true
Despite the current downturn in the airline industry, the FAA forecasts that air traffic will increase by 36 percent to 61.9 million aircraft handled in 2025 compared to 2008. EUROCONTROL also predicts that until 2030 flight movements over Europe will double compared to 2007. Therefore several programs worldwide have been initiated to research the potential that is available to increase capacity and efficiency. Lufthansa Systems has developed the FreeFlight module - an innovative add-on of its powerful Lido OC flight planning solution - which enables airlines to benefit from the latest advancements.
With the goal to enhance the ecological and economical efficiency of each routing, the Air Traffic Capacity and Flow Management (ATCFM) will move from airspace to trajectory based operation, to allow each flight to achieve its most efficient trajectory. With airspace based operation the possibilities for a routing are limited to available airways. These are defined and controlled by the Air Traffic Management (ATM) of each country. Often, these airways are restricted in time, flight level, flight direction or speed, which reduces the effectiveness of the flight routing. Based on the given structures and limitations flight planning systems have to find an optimal routing.
A trajectory based routing can be considered in free flight airspaces, where an airline is allowed to plan the routings without a given airway structure. This means, in free flight airspaces an airline can choose any route between A and B without being restricted by airways. This opens up almost unlimited options to calculate the most-efficient routing. But it also increases the demand on flight planning systems dramatically. The highly complex procedure of calculating the most efficient, trajectory in terms of distance, flight altitude, wind direction and speed in free flight airspaces requires highly intelligent optimization algorithms as well as high performance software procedures.
As an industry first, the FreeFlight module of Lido OC, automatically generates a dense carpet containing millions of artificial waypoints and segments in order to optimize flight paths by using geographical co-ordinates instead of waypoints and radio beacons. The method of "trajectory-based flight plan optimization" dramatically improves the fuel efficiency of every flight. Lufthansa Systems’ first simulations of the economical impact of free flight trajectories in an "artificial Single European Sky" have shown fuel improvements of more than 3 percent. Therefore also the environmental impact is significant. Emissions will be reduced as less fuel is burned. Some European ATC authorities (e.g. Portugal and Sweden) have already begun to tackle this difficult task by implementing free flight airspaces. Tests in flight simulators have shown that free flight could make it easier to keep track of air traffic in the extremely busy airspace over Europe. But how does it work? Collision avoidance is handled by on-board computers in cooperation with the pilots. On a technical level, the navigation computer in each plane regularly sends course data to all other aircraft in the area. If there is a danger of collision, the aircraft follows fixed rules to avoid one other. That way, aircraft are able to fly the shortest route to their destination at the ideal altitude and speed. In addition more aircraft can cross the same airspace if traffic is not restricted to the airways.
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