Group revenue management: Redefining the business process – Part 1

Some airlines view group business as a commercial burden of questionable worth. These carriers think of groups as low-yield traffic that carries a high administrative overhead, or they are fearful that carrying groups will dilute the revenue mix and displace higher-revenue opportunities. Other airlines carry a significant amount of group traffic, always have full loads, but still lose money. The simple fact is these airlines have yet to capitalise fully on the opportunities associated with the group market. Groups can increase an airline's revenue, fill seats that otherwise would have gone empty and increase the load factor of the airline. All this can be achieved through better overbooking, economically sound pricing and better negotiation tactics – and without displacing higher-revenue demand. In fact, any airline that has some excess capacity has the opportunity to do better. One way to do so is to exploit and/or expand the group segment of the market by adopting the right business process and by being properly supported with an automated group revenue management system. Without these two elements, any potential opportunity gain can turn into real revenue loss. If properly managed, group business can significantly enhance an airline's bottom line. Furthermore, with the element of automation, an airline can substantially increase the volume of business in generates – and without having to add overhead to realise economies of scale in productivity. This is the first part of a two-part paper; Part II will follow in Journal of Revenue and Pricing Management, Volume 1, Number 4.