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Optimizing Airline Revenue

Voyage operates in the airline industry where there is constant fluctuation of airline costs that leave management confused. There are also many other airline companies offering the same services and in the management of revenue, pricing plays a huge role in influencing important aspects such as increasing market share, increasing product development, and penetrating new markets. Pricing is complex with many factors contributing to constant changes in prices. “Because the average airline operating profit is just 3%*, it’s crucial that airlines use effective pricing strategies to make the most money for their products – while maintaining affordability for their customers” (Fairfly, 2021). Therefore, Voyage has to price more precisely to optimize revenue by Passenger Profiling and Customizing the Travel Customer Offer.

Passenger Profiling and Customizing the Travel Customer Offer

Voyage will profile its customers and adjust prices accordingly. It can group passengers as either leisure or business classes and ensure different prices that suit each group. This strategy will help Voyage increase customer impact and satisfaction. For instance, fairs can be higher for leisure travelers who book months before their departure. The prices can be low for business travelers who book when they need to travel. This will ensure that all types of travelers are accommodated and the airline will maintain its customers. Voyage has to understand which routes are mostly taken by business travelers and those taken by leisure travelers. Prices must be designed to suit every route and the type of passengers that go there.

Bundle Pricing

Voyage has to understand its customers and generate custom prices that suit their individual attributes. The prices designed must consider a wide range of factors such as supply and demand, traveler’s history with Voyage Airline, the initiatives of the company, and pricing by its competitors. According to Shao and Kauermann (2020), considering all these factors will ensure the Airline prices fairly or even generate better prices that will allow it to increase its revenue. Its pricing strategy will allow it to beat its competitors’ pricing and make higher profit margins from its services.

Building A Pilot Project

Voyage will do a test and understand what works for its model of business by measuring attribute-level customization. This will help the company determine optimum prices for each class and the highest possible amount each customer is willing to pay for a flight. They will then devise effective strategies for offering that price. According to Boin et al., (2017), the company can use customer travel profiles, purchasing patterns, the number of passengers that book in a day, and the origin and destination of passengers. This information will allow voyage to classify its customers and services effectively while designing differentiated offers and optimizing total revenue.

Discovery/Research

Aside from intelligence gathering, Voyage has to focus on research to capture revenue opportunities. With the growth in the airline industry and more route openings, travel frequencies are increasing, and Voyage should continuously monitor the market and the evolutions taking place. The company will identify any variations and improve its demand projection processes when there is a need. It must adapt its prices and other offers to the changing business environment in the airline industry. To capture any revenue opportunities, Voyage has to stay close to the market, increase its surveillance, study all the activities and signals, and quickly adapt its strategies and tactics.

Controls in Airline Strategic Planning and Management

Strategic planning and management are both important for every organization's process of achieving its long-term goals. Voyage airline utilizes strategic planning to form its direction, that is, its priorities, vision, and mission through strategic management, which is the overall direction achievement process from planning to execution. To promote growth and increase the airline's revenue, the organization uses the stay woke air strategy controls. These controls include reducing operating costs, pricing strategy, efficiency in airline operation, and yield or inventory management. Voyage Airlines uses these strategies effectively to continue increasing revenue and staying competitive.

Voyage airline compares every online travel agent to find the cheapest flight tickets on the net. It also offers loyalty programs by awarding its customers every time they fly their points or air miles to spend on their later flights. This way, customers are attracted to maintain their loyalty to this company. The airline also allows customers to get credit cards that allow them free first-class lounge visits. If a customer is flexible on the dates they fly, the airline provides a sky scanner tool to find the day that is cheaper to fly to their destination.

Airline operations in every company must be associated with a cost, and these operations may include aspects such as flight operations, maintenance, and ground resources. These flight operations include flight planning, the process of producing a flight plan for a specific aircraft destination. The process, therefore, involves fuel calculation for the aircraft to reach safe to its destination and involves compliance with the requirements of the air traffic controls to avoid risks associated with mid-air collision. The company planners also choose the appropriate route, speed, and height; they load the necessary fuel on board to minimize flight costs (Şi̇mşek & Aktürk, 2022). This way, the company can maximize its profit for its competitive advantage. Another flight operation that is essential to the company is the use of dispatchers. These people assist in flight path planning by considering en-route winds, aircraft loading and performance, airspace restrictions, and many other tasks (Şi̇mşek & Aktürk, 2022). Voyage airline employs highly qualified flight dispatchers to avoid losses associated with wrong decisions and missed plans.

It is very important to have an effective maintenance system for every aviation industry to stay in compliance with aviation regulations and uptime and reduce long-term airplane repair and maintenance costs. Voyage Airlines has made maximum use of specialized fleet management software to streamline its operations both on the ground and in the air. It also optimizes regular maintenance by employing qualified technicians who handle routine maintenance checks to keep their aircraft's worthiness, reducing costly downtimes and preventing the breakdown of machines in the future (Buyruk & Güner, 2021).

For its competitive advantage, Voyage airline conducts inventory management to identify the type and amount of stock to order at a specific time (Keivanpour & Kadi, 2019). This practice is important in responding to trends to ensure the availability of services and aircraft to fulfill customers. Internal factors that may affect airline schedules include market factors such as time zone, market size, location of airports, and total trip time. In addition, facilities that make a flight possible include terminal capacity, cargo handling facilities, runways, gate space, waiting areas, ticket counters, and navigation aids. In addition, the cabin crew and flight attendants are a major factor; they need to be adequately trained and given enough resting time. External factors include cargo shippers, weather patterns, airport authority, and local communities. All these factors are considered when determining customers' departure and arrival times in every airline industry. Airlines are faced with traffic flow problems due to the increased rise in the airline industry; this has put additional pressure on the traffic control system. It, therefore, calls for air traffic managers to be effective enough to avoid delays and collisions.

Forecasting matrix

The matrix below shows how each of the core elements relates to each other towards the revenue of the airline. The matrix focuses on the interaction between the core elements. In cases where a core element is compared to itself, the box is omitted as the impact of the individual element is described at length in the summary section.

Recommendation

Each of the core elements plays a distinct role in revenue structure. Therefore, there is no need of replacing any of the listed core elements. The only thing that the management should consider having is maintaining the expected level of efficiency in either of the core elements for higher performance.

There is a need to perform an evaluation of each of the core elements in relation to their contribution to the revenue structure. Seasonal operations assist in determining the expected variations in revenue throughout the accounting period. Fleet structure cost is necessary for determining whether Voyage Airlines has an optimum cost class or if there is a need to make adjustments per fleet. The staffing model is necessary for controlling labor costs which reduce the revenue earned by the organization. It must be flexible enough to accommodate changes in the market. The ticket pricing model is necessary for the forecasting model as it affects the sales volume. The level of capacity is needed in determining the ability of the airlines to accommodate different levels of market demand (Lohmann & Spasojevic, 2018).

Airline Fare Structure.

Voyage Airlines is going to be one of the most successful airlines operating internationally by providing first-class service and a comprehensive selection of practical amenities on board. When calculating the price of a ticket, Voyage Airlines takes into account several different factors. A few examples of these expenditures are airport fees, the cost of selecting a seat, the cost of checking baggage, airport taxes, fuel charges, and the cost of competing. In order to establish Voyage Airlines, we will do all in our power to guarantee that every seat on every trip is occupied. This will allow us to optimize our profits and help the firm achieve its goals. When you travel with Voyage Airlines, you will have access to a comprehensive selection of seating choices, ranging from the most fundamental to the most opulent. If this is successfully achieved, passengers will have a greater propensity to pay for extra services.

Passenger Demand Patterns

Our passenger demand trends reflect the increased need for reliable international service that appeals to business travelers as well as holidaymakers. The cities of Los Angeles, San Diego, San Jose, San Francisco, and San Bernardino are among of the locations in the state of California that serve as hubs for the airline Voyage. In addition, the airline has major hubs in San Juan, Puerto Rico, and Santo Domingo, Dominican Republic, both of which are located in the Caribbean. Our list of possible places to go on vacation has significantly expanded now that we are able to land in and take off from the airports of other countries.

Seasonal Operations

The seasonal operations of Voyage Airlines will offer a variety of available choices. For instance, since we anticipate that our customers will be flying more often than normal over the Christmas season, we will add extra flights to those that were originally booked in order to provide a fallback option in the event that any of the scheduled flights are delayed. Despite the fact that the holiday season of December is also a popular time to travel, summer remains the biggest travel season. As a consequence of the seasonal peak travel times, our airlines' seat factors and rates will increase because of the increased passenger volume. The seat factor and the average airfare should both be higher during the seasonal highs than they are during the seasonal lows; however, the ratio of the high seat factor to the low seat factor should be greater than the ratio of the high airfare to the low airfare.

Pricing Strategies

Among the pricing strategies that we intend to put into action are our competitive pricing, customer profiling, and the addition of additional fees to the price of the base product or service. The management of revenue is one approach that can be taken to achieve competitive pricing. Consider the scenario with the Expected Marginal Seat Revenue as an example (EMSR). Airlines are able to use account revenue to develop fares on specific routes as part of their real-time optimization of fares. This is possible thanks to the use of dynamic pricing. Expected Marginal Seat Revenue (EMSR) is a real-time technique for optimizing fares that take into account revenue opportunities throughout an entire airline network rather than focusing solely on a single route.

Operating costs

In order to turn a profit, an airline of any kind, including Voyage Airlines, is required to keep its operating costs within a certain range. It is the goal of each and every airline in the industry to cut their operating expenses by as much as may be reasonably achieved. Fuel, maintenance, and insurance are just some of the many operating costs that airlines are required to shoulder on a daily, monthly, and yearly basis, respectively. These costs included those that were susceptible to change, such as the price of gasoline and oil, as well as the price of maintenance and labor. The terms "depreciation," "leasing payments," and "insurance premiums," amongst many others, are all examples of fixed expenditures. The fact that Voyage intends to keep its operational expenses at a minimum to the greatest extent possible will ensure that this will not result in an increase in the total amount that its customers are charged for taxes or tickets. The only types of costs that we are powerless to change are the fixed ones, such as the amount we spend on fuel.

Revenue Matrix

It is anticipated that the funds generated by Voyage would come from a variety of pricing structures, including public and private prices, opaque pricing, and fees associated with bereavement. You may book your flight online, via any travel agency, or directly with the airline at the published rate. Published fares are also available straight from the airline. Travel agencies, internet travel businesses, and air consolidators all have access to a different inventory of private prices. It is very uncommon for the price of private tickets to remain unchanged, and they may be made available at any moment up to the point when an advance purchase is needed before departure.

Monitoring and the audit process

Monitoring and auditing are essential components of a business. Continuous monitoring is typically directed by the administration to ensure that processes are operating as planned. Monitoring is an effective form of detective control systems. Auditing is a rigorous, scientific, and disciplined procedure designed to analyze and enhance the efficacy of processes and associated controls (Britton, 2018). Auditing is controlled by professional standards, undertaken by professionals who are autonomous of the activity being audited, and typically carried out by individuals holding one of a number of recognized qualifications.

The monitoring and auditing procedure of Voyage Airline focuses on quality assurance. The audit plan contains five essential components to help the organization guarantee that its requirements are being met. These important components include “quality management, auditing, corrective action, reporting, and necessary action.” These elements will guarantee that Voyage Airlines provides superior service and training.

Quality Management

The quality management framework is intended to be effective, straightforward, and efficient. This unit is responsible for enhancing procedures, decreasing waste, minimizing expenses, and more (Yazgan, 2017). This department is also responsible for client satisfaction, ensuring that consumers are satisfied and identifying problems if they are not. A department of efficient quality management can prevent a business from failing. Early identification of flaws and difficulties enables Voyage Airline to take corrective action prior to client receipt.

Auditing

Auditing has a significant impact on how Voyage Airlines runs as a business. Audits are an effective tool that are used as part of a systematic improvement process. They are designed to guarantee the performance of the safety management duties, such as staffing, adherence to legal requirements, levels of competence, and training. It makes sure that the prescribed level of people competency and training is followed in order to operate the facilities and infrastructure and to maintain their quality standards.

An audit process has four phases which include: “planning, fieldwork, reporting, and follow-up” (Britton, 2018). In the planning stage, the audit process reviews the goals and plans of the audit, discusses any problems or proposed scope components, and discusses unit-specific hazards. The second aspect is fieldwork. During this step, the auditor collects pertinent information about the unit in order to gain a broad understanding of its functions and internal controls, and conducts transaction testing. Typically, these processes examine the primary internal controls as well as the precision and legitimacy of the transactions. The third step reporting. In this step internal audit will have a meeting with the department's management group to review the results, conclusions, and suggestions following the fieldwork (Britton, 2018). The auditor drafts a report, incorporating any changes resulting from the meeting held and subsequent conversations. The report contains a number of components, including the distribution list, scope and objectives, general evaluation, and results and suggestions. Lastly, auditors will conduct a follow-up examination to confirm the ultimate report's suggestions have been adopted.

Corrective Action

After the audit has been carried out and the inconsistencies have been discovered, it is now time to take the appropriate steps to make the necessary corrections. Each audit that is carried out is unique in its own particular way, and it can and should be utilized as a teaching tool for both staff members and management (Kusserow, 2020). In the event that a discrepancy is found, the auditor should clarify why it is incorrect and how to fix it. This will inform the employee how to avoid making the same mistakes in the future. Eventually, corrective actions are not negative; in fact, they are beneficial to the company's growth.

Reporting

After corrective measures have been taken, a report will be generated to document the situation. This report will provide a comprehensive analysis of what the problem is and how the organization intends to rectify the situation. In the reporting stage, investigations will be undertaken on present policies to identify disparities and areas for improvement. After completing the report, the Director of Quality Assurance must evaluate and approve any policy adjustments. After approval, measures can be taken on the case.

Action

During the action stage, newly formulated policies or operating procedures are put into effect. All organization supervisors will be provided with a summary of the situation, enabling them to brief their personnel. If the policy is modified, the supervisors will undergo training on the subject and subsequently advise their workers. With this procedure, Voyage Airlines will guarantee that all policy revisions are communicated to staff, thereby keeping them informed. Once distribution within the organization is complete, the Director of Quality Assurance will be contacted and the report will be closed.

References

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