Alaska Airlines is set to generate “a few million dollars” from its Revenue Rebook program this year. But how does the program work, and more importantly, how does it generate additional revenue for the airline? The airline’s MD of Revenue Management, Kirsten Amrine, revealed all, speaking at the Altitude 22 industry event in Dubai hosted by aviation IT provider, Amadeus.
Airlines are always looking for ways to increase revenue as a business. Typically, ancillary services are the go-to. For example, selling a seat reservation brings in additional income at no extra cost to the airline. Alaska Airlines’ Revenue Rebook scheme takes a different approach, making passengers happy while generating additional revenue.
How does it work?
The premise behind Alaska Airlines’ Revenue Rebook scheme is quite simple. The airline’s IT system looks at booking levels and demand for flights. If a particularly in-demand flight is sold out, the airline proactively looks for volunteers to rebook onto another flight. This frees up space on the flight for people willing to pay a premium for it.
By voluntarily rebooking passengers, Alaska Airlines can free up space for passengers wishing to pay a premium for a high-demand flight. Photo: Vincenzo Pace – Simple Flying
Explaining it, Amrine remarked,
“The Revenue Rebook product says ‘maybe there are some people on this peak flight who don’t actually need to fly on the peak flight.’ So you can offer them compensation, vouchers to fly on your airline later and given them the option to choose to fly this other flight that’s empty.”
Everybody is happy
This is seen as a win-win-win for Alaska Airlines. It’s a win for the passengers rebooked, as they are awarded a travel voucher for their voluntary inconvenience. It is a win for other passengers who can now book the flight they need to travel on.
It’s also a double-win for the airline. As well as allowing the airline to capture increased revenue from those paying a premium for the in-demand flight, offering an Alaska Airlines voucher to the rebooked passengers provides an incentive to pick to fly this airline again over competitors for future flight bookings.
The scheme is a win for both sets of passengers, as well as for the airline. Photo: Vincenzo Pace – Simple Flying
Commenting on the system, Amrine revealed that even though it is not yet optimized, the airline already sees concrete results,
“We turned this on just a few months ago and we’re still optimizing it. Even though we’re still optimizing, we’re going to make a few million dollars off of it just this year.”
Part of a larger revenue program
The Revenue Rebook system is the second phase in a more extensive “post booking optimization program.” Phase one of the project between Alaska Airlines, Amadeus, and Volantio dealt with denied boarding when flights were overbooked.
According to a case study published about phase one, Shane Tackett, CFO of Alaska Airlines, said that the first phase had a direct financial impact of $20 million per year, with further benefits coming from reduced involuntary denied boardings and reduced workload for frontline staff.
What do you make of Alaska Airlines’ rebooking program? Let us know what you think and why in the comments down below!