Success Stories

SAS Benefits From New Revenue Management System

Client:

Scandinavian Airlines System (SAS)

Utfordring

Optimize the use of passenger flight and ticket pricing data to predict market trends and improve profitability.

Løsning:

Create a Revenue Management Forecasting System called Odyssey that can conduct complex mathematical computations to support revenue optimization forecasting and scenario analysis activities critical for optimizing of pricing and overall revenue.

Resultater:

An increase in revenues, improved forecasting, and enhanced flexibility.

Scandinavian Airlines System (SAS), the major airline serving the Nordic region, is keenly aware of the important role technology plays in the strategic planning of resources and revenue. So when SAS decided to improve its business forecasting abilities, the airline turned to CSC to help develop Odyssey, a sophisticated, innovative system that is able to perform complex number crunching tasks and generate useful business forecasts.

By fine-tuning revenue management capabilities, airlines can maximize profitability. Increasingly, airlines across the globe are relying on Revenue Management Systems (RMS) to compile and analyze passenger and flight data to make accurate business forecasts and optimize revenues. Precise forecasting ensures that an airline can meet shifting market demand trends and also set the optimal ticket price for each seat on each flight. In the case of SAS, Odyssey is already delivering a number of important business benefits.

Right for the job

Jørn Peter Petersen, director of revenue management at SAS, describes the benefits he expected Odyssey to deliver at the outset. "For large carriers, it is very important to be able to control traffic flows in the network as accurately as possible, and among other things, this requires very good forecasts." Petersen says his expectations for the system include:

Improve forecast quality by 3 to 5 percent
Realize revenue gains of $14.5 million a year
Improve the ability to adjust forecasts
Make forecasts independent of flight numbers to reduce manual work
Create a database with historical traffic flow data
Prepare the system to be optimized for all airlines in the SAS Group.

Petersen explains why CSC was the right IT partner for the project. "The success of the project was dependent on finding highly skilled developers - combining IT skills with complex mathematics and forecasting methods - who could translate our precise requirements into software. CSC has extremely talented and motivated personnel in this area, who were eager to work closely as a team with SAS. That was a prerequisite for success."

"CSC understands the process involved in developing IT systems in this very complex area," says Petersen. "It requires successful prototyping and ongoing changes. CSC is excellent in this dynamic, research-oriented work environment. They offer the flexibility and teamwork approach that made it possible."

Teamwork a key

Jørgen Hertz, an account manager working with CSC Airline Solutions agrees that teamwork was a key to the project's success. "CSC offers more than a unique understanding of airline revenue management systems. We also offer the ability to change specifications to develop an optimal product. Working together with SAS in a tight and close partnership gave the project team the right spirit to work together towards that unified goal."

Odyssey's success has far exceeded SAS's expectations. The overall result is the combination of a complex mathematical concept with an IT system and is thought to be the first of its kind to be successfully deployed in the airline industry. The actual prognosis improvement after the implementation of Odyssey was measured at close to 10 percent.
Petersen explains the significance of this accomplishment. "The forecast quality improvements were more than twice as big as expected," he says. "Better forecasts in RMS generate more revenue, so the total revenue benefits are also doubled. With our industry in crisis, it's nice to have these revenue gains. Odyssey really gives us an edge over the competition."

In addition to meeting or exceeding all of SAS's expectations, Odyssey has performed in unanticipated ways as well. Hertz explains, "SAS has been able to use the system for answering other kinds of questions. And Odyssey was designed to be extended, so it can be evolved for the rest of the SAS Group."

Petersen adds, "It can also be used for predicting other trends and establishing more effective procedures. One important and unexpected benefit is that Odyssey can provide the basis for new RMS projects. This was a nice surprise that will cut time and add a lot of value." Today, all revenue managers at SAS use the Odyssey application to obtain better revenue forecasts and CSC continues its involvement with Odyssey through system maintenance and production.