S7 Airlines boasts the widest domestic network of routes in Russia, operating from its headquarters in Novosibirsk as well as its other hubs: Moscow Domodedovo Airport and Irkutsk Airport.
Since 2008, S7 Airlines has been Russia's biggest airline, based on the number of domestic passengers. And these passenger numbers, which have grown from some 4.9 million in 2006 to 6.3 million in 2012, are expected to reach over 14 million by 2025.
S7 serves not only a vast array of Russian destinations, but also offers regularly scheduled flights to Europe, the Near East, Southeast Asia and to countries in the Asia Pacific region. And thanks to its membership in the oneworld® alliance, its passengers can travel from as many as 150 countries.
S7 Airlines is also a market leader in providing on-line services, facilitating flight selection, flight bookings, and check-in.
A key component to S7’s success is in large part due to its focus on finding ways to make its passenger management process more efficient while at the same time addressing any underlying revenue integrity issues.
S7 Airlines is determined to optimize opportunities offered by business intelligence and concurrently minimize revenue leakage to grow its business and maximize earnings.
Before 2006, S7 Airlines was experiencing the classic symptoms of revenue leakage – that is the gap between the revenue that the airline booked and the amount that it eventually received. The two major causes for this leakage were ‘no-shows’ by booked passengers and late cancellations. This resulted in lost revenue as flights were taking off with empty seats and customer satisfaction suffered because there were fewer seats and less choice for real passengers.
Deciding to tackle the matter head-on and understanding the need to manage revenue leakage and its ability to transform data into action, S7 decided to implement SITA’s Revenue Integrity solution.
The challenges to revenue integrity are numerous, ranging from un-ticketed bookings to incorrect booking classes to the abuse of fare rules to space blocking. Other issues are multiple bookings on several flights and on multiple carriers, and even simple name changes. It is undeniable that all of this data is dispersed in many systems. S7 needed to take a holistic approach to manage the entirety of this information intelligently, as there was no hope of addressing bookings individually to achieve any degree of revenue integrity.
SITA’s Revenue Integrity solution went a long way to resolving the major issues cited above in terms of revenue enhancement. It made sure that the revenue integrity processes checked all of the bookings made and matched them against set criteria. These processes are underpinned by SITA’s Horizon Passenger Services System. This allows S7 to maintain full control of reservations while giving passengers the flexibility to make their own flight choices thanks to an agile design which ensures intelligent sales through multiple channels and responsive service.
However, regardless of the success of the above solution, S7 continued to look for more areas of improvement. A critical area of need was to conduct revenue integrity processes in real-time instead of overnight. In short, S7 wanted to reduce, even eliminate any lost revenue opportunities as soon as possible.
The classic Revenue Integrity solution, which has helped S7 to save costs and generate incremental revenue, runs overnight in batch mode. To enhance the Revenue Integrity process and significantly reduce response times, S7 was invited to test SITA’s new Real-Time Module whereby the Revenue Integrity process would be run and monitored throughout the day on an actual time basis.
The Real-Time Module delivers immediate revenue improvement and avoids inventory spoilage as it applies distinct actions according to established business rules. This is done as soon as the Passenger Name Record (PNR) is created, or modified, or an action is due. In addition, it allows the Revenue Integrity process to handle bookings made close to the time of departure and applies business rule updates as soon as any changes are made.
For S7, the net and most immediate result of using the Real-Time Module was that it increased the cancellation of fictitious bookings by as much as 70%. And the overall number of abusive bookings flagged rose by over 250%, increasing seat availability and therefore creating more opportunities for true sales. Another advantage of the real-time process, as experienced by S7, is that the number of warnings sent to airline agents to follow up with travel agents rose by some 93%. This also opened up additional availability to help regain lost seat revenue.
From the passenger’s perspective, there is a significant improvement in the level of service provided by S7 due to increased seat availability. Customers are more likely to get access to popular flights that were previously closed for sale, as well as getting their preferred seating confirmed at the booking stage.
From an operational perspective for S7, the Real-Time Module process of automatically cancelling bookings that had not been ticketed means that the airline’s staff no longer needs to spend time on the manual checking of flights. Airline staff can be redeployed for higher value services, which generate incremental revenue, while reducing overhead costs.
“With Real-Time Revenue Integrity, we will cut the manual checks of flights, which represents a large part of our work” said Larisa Shilova, Head of Distribution Technologies Department, S7 Airlines. She continued, “This will automatically cancel fictitious PNRs without our involvement, freeing up space that can be re-sold."
The mark of S7’s success is its focus on harnessing the power of the data and using it in real time to deliver full time performance to the satisfaction of its passengers, agents and revenue bottom line.
According to Pabitra Bhattacharya, Senior Product Manager, SITA, “The actual cutover took only 39 minutes, with the first Passenger Name Records (PNR) processed a mere 30 minutes later." He added that “it was the long term commitment of the client and the whole SITA support team that allowed us to transform a long-term project into full implementation."