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Commercial Convention Network & Revenue Management

Commercial Convention Network & Revenue Management. Palma 19/12/2008. Economic crisis will continue in 2009. GDP will drop to -1-2% in 2009 Financial crisis will continue worldwide Demand for goods and services will drop. Weakening traffic demand for 2009.

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Commercial Convention Network & Revenue Management

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  1. Commercial Convention Network & Revenue Management Palma 19/12/2008

  2. Economic crisis will continue in 2009 • GDP will drop to -1-2% in 2009 • Financial crisis will continue worldwide • Demand for goods and services will drop

  3. Weakening traffic demand for 2009 Domestic demand expected to decrease more than 25% during the crisis period

  4. A/Cs short / medium haul distribution & Market Share 2% 21%

  5. Spanair Network Strategy • Spanair is a short/medium haul network carrier offering a network of high frequency routes to/from and within Spain • Focus is on markets with high level of business travel where frequency, time table and dual class service is a suitable business model • Network strategy can be categorized as “Hybrid network model” due to Spanair participation in the Charter & leisure market when demand in the business segment is low in order to maximize use of resources and profitability across market segments • Spanair operates from two bases with focus on Barcelona as main hub in the coming years with continued development of new domestic and international destinations from 2010 when both new terminal and new slots will be available • Strategy is aimed at maintaining position in Madrid as 2nd domestic carrier due to the size of the market although adjusting offer to development of the AVE high-speed train network • Spanair will continue in Star Alliance and intensify cooperation with member carriers in order to offer a network that includes a wider range of European and Intercontinental routes from/to Barcelona

  6. Barcelona is the key focus and center for growth in Spanair´s Network Strategy

  7. Madrid remains a potential strong profit generator but will over time lose part of its value due to strong competition

  8. Objectives 2009 • Accomplish Revenue Budget by: • Constantly monitor, evaluate and analyse every change in the market place to adapt product and capacity offer • Adapting prices and optimization based on market demand and competitor price strategy • Protecting and develop our market position in BCN (network) • Implementing Viability Plan projects/activities within area • Increasing cross functional cooperation with Sales • Continuing development of Traffic program principles to give foundation for excellent operational KPI´s • Process development in all areas to increase “time to market” • Leadership & Communication development

  9. New organization Network & Revenue Management

  10. New organizationNetwork Management

  11. New organization Revenue Management

  12. BUDGET 2009 Q1 .

  13. Pricing Strategy • Pricing structure by product package in line with the Spanair*4 concept with the following characteristics: • OW pricing structure (with some exceptions in route based and lowest fare levels) • Number of pricing points and booking classes in the ECO product increased while ECO+, AVANT and BUS maintain current structure • New booking class structure with improved capabilities to segment different demand • Usage of Advance Purchase fare restrictions reflecting the behavior of the different segments of the market • Increased usage of Minimum Stay or Sunday Rule fare conditions in order to segment the market on key business markets where travel behavior defines willingness to pay (only few routes) • O&D pricing project in Viability Plan to enhance connecting volumes • Interline project in Viability Plan aimed at increasing revenues (yield) from OAL traffic by changing fare levels, YR agreements and new booking class usage • Discount management in order to optimize our revenues from corporates and Business Travel distributors taking into account demand development • Develop scheme for discount in ECO+ product (in addition to AVANT and BUS)

  14. Revenue Management Strategy • Revenue Optimization strategies are based type of route, our position on route, and type of competitor. General orientation to maximize RASK: • In Leisure markets with LCC and Traditional competition a low fare and Volume based strategy will be pursued. Price leader in case of very strong product position on the route • In mix Business/Leisure markets with Traditional carrier competition a mix of Volume and Yield strategy, where the stronger the position the higher is the emphasis on yield strategy • In mix Business/Leisure markets with LCC carrier competition a mainly a Yield strategy without losing significant market share (vs capacity shares), where the stronger the position the higher is the emphasis on yield strategy • Rembrandt development leading to enhanced revenue management through • New processes & Tools development • Increased learning curve = better system usage (already noted since implementation in 2007) • New system version 3.8 with new functionality (APR09) • Promotional activities/campaigns in line the guidelines set forth in the Viability plan project

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