We talk to Tomi Hänninen, Vice President for Revenue Management & Pricing at Finnair, about his airline’s vision and experience of selecting and using SITA’s ground breaking pricing management tool, Airfare Insight.
The airline was established in 1923, which makes it one of the oldest operating airlines in the world. Today, we aim to offer our customers what we describe as a unique Nordic experience, with the smoothest, fastest connections in the northern hemisphere via Helsinki and the best network to the world from our home markets.
We carry about 10 million passengers every year to and from 17 destinations in Asia and more than 70 in Europe – and we have one of the most punctual and reliable operations in the world. We’re particularly focusing on the natural competitive advantage of our Helsinki hub: we can offer many of the fastest routes between Europe, Asia and North America, with minimum connection times as short as 45 minutes and connection reliability close to 99%.
Our service reflects the classic Nordic qualities of simplicity, modernity and functionality at the airport, in lounges and on board. The intent is that customers arrive at their destinations relaxed and with peace of mind. The Finnair brand is known for quality: we have a 4-Star Skytrax rating and have won the Best Airline in Northern Europe in World Airline awards four years in a row.
We have one of the youngest fleets in the world, with 46 of our own aircraft and 26 with Nordic Regional Airlines, a regional operation that we partially own. In October last year, we were the first European airline to fly the new Airbus A350 XWB. We have firm orders for 19 aircraft, forming the backbone of our future growth strategy and introducing a complete refresh of our cabin design and cabin services.
Finally, we’re known as one of the most environmentally conscious airlines globally: we were one of the first two airlines in the world to receive IATA’s IEnva stage 2 certification in 2014.
Despite the economic closedown in China, the medium and long-term forecasts for growth in the number of Asian passengers remain considerable. It’s a great opportunity for us and the investment in the Airbus A350 XWB is one indicator of our intent to benefit by delivering the best aircraft and the best levels of service – Nordic service.
To do that effectively, we must also foster a culture of continuous improvement in all areas of our operations. It’s self-evidently critical to get the best pricing strategies and tools available if we are to stack up against increased competition for the Asia–Europe space. We recognized that we needed to get up to speed with our benchmark airlines not only in operational quality but also pricing and optimization. So 2015 was the right time for us to upgrade our pricing toolbox.
Once we had completed our initial search, we organized workshops with the three shortlisted vendors. They were assessed against three factors: user cases, overall attractiveness and workflow quality. There were multiple aspects in each of the dimensions that were scored after the workshops.
In user cases, Airfare Insight got the highest average score in seven out of eight aspects. Of particular note, the way the all-inclusive fares were displayed made Airfare Insight outperform the other two options.
For overall attractiveness, Airfare Insight scored highest in five out of seven aspects. Distinctive user friendliness of the solution and vendor knowledge on pricing function made Airfare Insight stand out. Airfare Insight was also rated as best able to meet Finnair expectations in general.
For general workflow quality, Airfare Insight was graded as the best option to provide enough data in the right format and on the spot for efficient pricing decisions. Overall, SITA Airfare Insight scored measurably higher than the runners up.
The project began by defining the initial data set-up for Finnair. Thanks to SITA’s excellent commitment to the project, we were able to start the process during negotiations and before the contract was signed. It meant we were able to hit the ground running. Otherwise implementation could have been delayed by weeks, even months.
Once we all had a strong business understanding of what was going to be needed, we were able to come up with the best possible solutions for Finnair. With the right resourcing we were able to move ahead with full steam and as a result, the implementation process was completed one month ahead of schedule and was noted as one the most successful project implementations at Finnair in 2015.
It's still early days in terms of evaluating concrete business results but our speed to market has certainly improved – for example, in terms of reactive tactical pricing.
User feedback has also generally been positive. This is particularly encouraging as one of the targets for implementing a new pricing tool was to establish a more efficient workflow for the pricing team.
Every business is ultimately about people. Pricing and revenue management in the core of an airline's commercial operation is a good example. It’s a scientific, number and system intensive area of the business – but it’s the skilled and motivated professionals who finally make the difference between competitors, who basically all have access to the same data and systems.
Having said that, IT is playing a major transformational role at Finnair. Digitalization is one of the company-wide must-win battle focus areas and will continue to be used to enhance customer experience in the years to come. Another example could well be our upgraded systems in pricing and revenue management: they provide people with much better tools to actually contribute to their maximum potential.
Every airline CEO should care passionately about pricing – that’s the message from SITA’s paper on Airfare Insight ‘The Price of Success’, the tool designed to help airlines stay ahead of the competition in the perpetual pricing war.
A component of Horizon®, SITA’s next generation passenger services system, Airfare Insight allows pricing managers and their teams to take proactive pricing decisions, rather than reactive, thanks to a centrally managed system with monitoring, calculation and automation capabilities in one package.
You can drop in on a conversation between a typical CEO and Pricing Manager by downloading the paper.
Jet Airways, one of India’s largest airlines, has renewed its contract with SITA for Airfare Insight, the industry-leading fares management solution that provides competitive intelligence to enable the airline to control its pricing.
Airlines typically compare fares with competing carriers using the base, or filed, fares, which may bear little resemblance to the actual price paid by passengers because they do not include taxes and charges.
However, SITA Airfare Insight has an ‘All in Fare’ option that automatically enables the airline to see and compare the price the customer pays, inclusive of taxes and charges. So it gives Jet Airways a true view of the market from the passenger’s perspective.
Cramer Ball, CEO at Jet Airways, said: “Airfare Insight helps us evaluate pricing based on our revenue management and sales strategy, enabling us to analyze and manage fares across multiple locations and time zones, and implement decisions much faster using fully automated distribution.
“We were the first carrier in India to use SITA’s Airfare Insight and it has proved to be an excellent tool. We expect its next generation will be even more effective.”