FlyMiwok’s online booking system (to be launched next month) uses a unique pricing system that we had to design from the ground up over the past 3 1/2 years. Historically, the on-demand industry (taxi-cabs, limos, air-taxis) has generally sold travel by the vehicle whereas scheduled services from busses to trains to the airlines sold travel by the seat. Selling by the smallest economic unit (i.e. the seat in the case of travel) has a number of significant advantages for our operators, and here in a nut-shell are the 2 main reasons why we are such firm believers in the new “per-seat, on-demand” model:
- Higher inventory/capacity. Simple math: if you have 5 airplanes with 3 seats available for sale and you sell by the airplane, how much product do you have to sell? answer: 5. If you sell by the seat: 15. The difference, of course, grows exponentially as you add more aircraft.
- Revenue/yield management: In many travel segments revenue management plays a key role. It certainly plays a huge role with the airlines, hotels and even rental cars all over the world. Pricing by the seat allows our operators to attach different demand curves to different seats sold on the same flight, thereby maximizing profit for that flight and pricing it in a way that is much more closely aligned with both the customer’s request and the management of the operator’s resources.
The main reason yield management has never been done before in any on-demand industry is that it is hard to do – and can only be done through some very sophisticated technology. Airlines use very complex revenue management software, as do hotels and other industries. But – until now – the on-demand market has never had access to the kind of revenue management it needs.
However, in many ways building a revenue management system for the on-demand market is even harder to do than for the airlines. At least, scheduled carriers have a schedule. They have pre-assigned routes. Our on-demand operators don’t – they never publish a schedule and, since they are truly on-demand, they also have no specific routes.
This meant that we at FlyMiwok had to build a revenue management system that is totally dynamic in nature, that offers operators control over their pricing while adhering religiously to operational control guidelines and to the requirements of an unscheduled operation.
Gad Barnea – CEO – FlyMiwok, Inc.
Comments on this entry are closed.