As Cebu Pacific’s fleet expansion kicks into high gear—the country’s leading carrier recently ordered 31 next generation aircraft from Airbus—its backroom operations systems have undergone a massive upgrade as well, giving the company an added competitive edge.
The overhaul of the company’s systems has already born fruit, leading Cebu Pacific to be recognized at the annual Pride in Performance Awards of the JG Summit conglomerate. Now on its ninth year, the awards are presented to business units of JG Summit Holdings, Inc., Robinsons Retail Holdings, Inc., the Summit Media group and other affiliates that have made a significant impact during the past business year.
It was in the category of Digital Transformation where Cebu Pacific made its mark, being lauded for its entry, “Maximizing Revenue and Operations through Data Analytics (airRM, Empty Seat Program, and Operations Analytics).” While there are many complex elements at work, data interpretation is at the heart of this program.
According to Racel Sotto, Cebu Pacific’s Director for Revenue Management and Pricing, “Data, statistics, trends, evidence are all inputs in making sensible decisions [in the airline industry]. Having these readily available combined with the airline personnel’s ability to make sound conclusions and recommendations makes for a winning formula.”
Cebu Pacific wins big at the JG Summit conglomerate's Pride in Performance Awards. From left: Lisa Gokongwei-Cheng; Mike Szucs, Cebu Pacific Chief Executive Adviser; Alexander Lao, Cebgo President and CEO; Racel Sotto, Cebu Pacific Director–Revenue Management; Lea Niigata Barra, Manager–Revenue Management; Aldwin Sangalang, Revenue Management Specialist; Mike Shau, Cebu Pacific Chief Operations Officer; Candice Iyog, Cebu Pacific Vice President of Marketing & Distribution; Caloi Santos, JG Summit Holdings CIO.
In the airline industry, as with many other businesses, maximizing time and efficiency are of utmost importance. “For example, streamlining the queueing process at the boarding gate by 5 minutes may mean millions of pesos in savings and exponentially improving the passenger experience. An increase in Korean passengers booking flights to Bohol may provide opportunities to add flights that would connect an Incheon-Manila flight to a Manila-Tagbilaran flight, thereby expanding revenue streams from this segment,” explains Sotto.
The airline’s Data Analytics team is likewise crucial to interpreting information, whether historical trends or forecasts for the coming months; this interpreted data is then passed on to the Revenue Management team for added insights.
In 2018, the airline’s old revenue management system—a built-in module of the Navitaire system—which the Revenue Management team had been using since 2010 was replaced. According to Sotto, the airline needed a new system to address the following requirements:
- The ability to deliver reliable forecasts (for seat inventory management and optimization)
- System recommendations should take into consideration historical demand and able to show data granularity on a per flight basis
- Enable analysts to cut time spent on manual adjustments and focus on revenue-increasing strategies
- Turn distressed inventory (the projected number of unsold seats per flight, i.e., empty seats) into revenues with advanced forecasting of empty seats.
After a thorough 6-month evaluation, the airRM system from Revenue Management Systems, an Accelya Group Company, was chosen between November and December 2017. It was rolled out in February 2018.
After less than a year, the improvements were already substantial, in three areas in particular. According to Sotto, the data analysts’ efficiency increased by 25%. “Each analyst is now able to handle 25% more flights and was able to cut down non-RM core activities by 15% (with the increase in system utilization, they now focus on data analysis instead of report generation).”
Another benefit has been fuller flights that address the public’s demand. “Test routes have exhibited a significant improvement in load factors (seats sold over total seats on the flight) with +17pts growth year-on-year. Consequently, yields (average fare per passenger) are also pulled upwards, improving 4% year-on-year.”
In conjunction with that, the new system provided for more accurate seat load forecasting, resulting in increased revenues from better distressed inventory management. “Whereas before, analysts were hesitant to allocate seats on promo fares due to the lack of confidence in the system’s forecast, there is now a high level of confidence in the system’s recommendations. The analysts are now able to allocate more promotional seats and lower fares which can be used by our Marketing and Distribution teams to further strengthen Cebu Pacific’s market offering,” says Sotto.
This ability to better predict unused inventory led to the creation of the Distressed Inventory/Empty Seat Program. It was implemented in phases to test various price points and rule combinations. “Using GetGo as the pilot platform, it produced Php 248M incremental revenues in 2018. Since then, it has been rolled out to Packaged Tours and Employee Travel Benefit programs.”
For bookings and inquiries, visit www.cebupacificair.com or call the reservation hotlines: +632 702.0888 (Manila); +633 223.0888 (Cebu). The latest seat sales can be found on CEB’s official Twitter (@CebuPacificAir) and Facebook pages. You may also download the Cebu Pacific official mobile app on the App Store and Google Play.
