Revenue leakage doesn’t only affect the airline’s profits. It affects overall economic health and results in accumulated drainage of principal investment over time.
The discussions in the recent past witness that the revenue management systems do not adhere to serious ticketing violations, ultimately resulting in ADM. The current best practice to resolve such violations is outsourced, semi-manual audits with varying levels of systems support. For a $2B airline, this lost profitability is estimated to be $20M to $60M per annum.
Current audit business models based on percentage of recoveries are not suitable for examining revenue leakage within direct sales channels. Airlines need a transaction based approach that is capable of reviewing every sales channel, including direct channel transaction. Overall, this mismatch between expected revenue and the actual amount received originates in stages such as:
- Reservation stage (un-ticketed booking, space churning, seat blocking, duplicate booking)
- Payment and ticketing stage (booking classes violations, fare rule violations)
- Funds settlement (ADM costs, unnecessary distribution costs)
- Post booking stage (last-minute cancellations, refundable no-shows, tariff abuse)
The existing procedure proves to be inefficient while dealing with problematic travel agent behaviour and achieving a leak-proof revenue stream. Currently, the industry is working on corrective measures such as; PNR reconciliation programmes, integration of stand-alone revenue audit models, employing more strict rules, and simplifying the ADM to avoid revenue leakage and prevent fraud. In an environment where airline profitability is averaging
Recent evolution and application of disruptive technologies are capable of overhauling the airline revenue landscape altogether. Detect, reveal, and stop leakage has been tested and proven to be error-free. AI-based systems with increased refund audit frequency and 100% validation can help airlines reclaim their lost efficiency. An objective of maximum revenue recovery while processing millions of transactions can eventually lead to error-free, data-driven audits in a broad-spectrum ticketing lifecycle.
The availability of tools and technology is a paramount aspect of recovering millions of dollars annually due to revenue leakage. However, technology alone is not capable enough to revive the normative culture within the airlines. It requires decisive leaders to cultivate an enabling environment, building trustable and transparent systems, and ensure accountability for full optimisation and business growth.
Is your airline ready to lead the technological revolution and reclaim the lost power?