Tangible and Sizeable Profit Impact
A major airline suffered from significant revenue leakage from under-collection of fares from issued tickets amounting to about 3% of revenue. The under-collection represented enough to turn the airline from a profit making to a loss situation in any one year. The leaks were due to a range of factors such as fraudulent ticketing activity, mismatched fare basis codes, invalid fare amounts or errors associated with taxes, fees, surcharges and advanced purchase or abuse of waivers. Group bookings also represented a significant segment of intentional abuse of inventory leading to significant loss of revenue. The current sales audit was outsourced to a third party which carried out first pass audit on tickets.
Our comprehensive automated technology-driven system and process approach identified up to ten times more revenue recovery benefits than traditional sales audit, despite doing a second pass audit. RBD violations dropped by 95% within six months of the audit starting with behavioural change among agents sustained. In addition, our approach identified twenty times more violations and ADM dollar value recouped compared to the external audit vendor’s approach. A series of quick wins (including RBD violation detection and group booking transparency) and long term sustainable solutions delivered protection value of more than $25M per annum.
- Reissue avoidance – loss of up to 0.5% in agency sales; for each $100M, the loss was up to $0.5M
- Class/RBD violation – loss of up to 0.5% in agency sales; for each $100M, the loss was up to $0.5M
- Group materialisation loss – loss of 1 to 2% of group revenue; for each $100M, the loss was up to $2M
- Sales audit 100% checking – loss of 1 to 3% of group sales through agencies; for each $100M, the loss was up to $3M