The influence of revenue management and inventory control on air shopping
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PRACTICE ARTICLE
The influence of revenue management and inventory control on air shopping B. Vinod1 Received: 3 April 2020 / Accepted: 10 July 2020 © Springer Nature Limited 2020
Abstract Air shopping volumes have been growing at a rapid rate over the past decade. The four components of air shopping are schedule generation, itinerary selection, booking class availability and itinerary pricing. Booking class availability is the most volatile and this paper discusses the impact of revenue management, inventory control and booking class availability on air shopping. Keywords Revenue management · Airline inventory · Air shopping · Availability · Cache · Booking class
Introduction Air shopping constitutes a significant investment in advanced algorithms and hardware to respond to customers and travel agents when a request for itineraries available for sale in a market are made. The major entities who invest in air shopping are the three Global Distribution Systems (Sabre, Travelport, Amadeus), Google Flights and Expedia. When a customer plans a trip, the first step is to explore itinerary options for travel to the desired destination and return, if applicable. The itineraries displayed during shopping are the available itineraries that can be booked. The primary components of air shopping are airline schedules, airfares and seat availability by booking class. Availability of seat inventory, the end product of the revenue management process, influences what itineraries are displayed during the shopping process. The major components of air shopping are shown below in Fig. 1.
Complexity of air shopping Over the past decade, shopping requests have outpaced growth in bookings. Figure 1 illustrates the growth in shopping volumes at Sabre for the indirect channel (Fig. 2).
* B. Vinod [email protected] 1
3150 Sabre Drive, Southlake, TX 76092, USA
The total shopping requests for 2019 exceeded 249 billion. Associated with this volume growth from travel agencies and customers, is the growth in schedules, fares, and availability. Adding to the complexity is the real-time volatility in seat availability and fares. Schedules, air fares, and seat availability are constantly changing. However, schedules have the lowest rate of change, followed by fares and seat availability. Airline schedules go through planned and ad hoc changes, new fare transmissions are accepted hourly and seat availability by booking class and point of sale changes continuously based on bookings, cancellations and airline revenue management flight and network re-optimization activity that update inventory controls. A shopping solution should absorb the changes in fares, schedules and seat availability from airlines and their partners constantly throughout the day. Another layer of complexity is the response times for a shopping request—the response time is the sum of the time it takes to process the request on a server and the network latency. Server compute times are impacted by the interdependencies between schedules, fares and seat availability. For
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