world leading revenue management. renaissance at british airways adapt to survive paul beadsmoore...

World Leading Revenue Management


Renaissance at British AirwaysAdapt to Survive

Paul BeadsmooreRenaissance Architecture (role)Principal Business Analyst (job)

Business Solutions (team)


Before we begin, a word from BA recruitment

• Vacancy for a talented individual:– To turnaround the first loss since privatisation– To deliver a ‘tough strategy for tough times’– To build a sustainable future– Must be focused on the customer– Must be in touch with the workers– Must be ruthless in cutting costs

• Replacing the boss is one of the biggest changes a company can experience


Summary• There is now unrelenting pressure for the

airline industry to continually change• British Airways is transforming its

Revenue Management capability to enable a flexible future

• Applying the technique of component based development (CBD) will facilitate this transformation

• Smart-sourcing of components will deliver the most efficient and effective solutions


Some examples of change affecting British Airways

• Capacity reduction - focus on high yielding business

• New products - 4 cabins in longhaul• Deregulation in Europe - low cost carriers• Excessive global capacity - airline industry

currently making a loss• Pressure on profit - strength of sterling, fuel• Selling - intermediaries embracing the

concept of revenue management


Changes to the way BA Revenue Management

reports• Now part of the Strategy Department• Part of a work stream called Capacity

Management– Fleet Planning– Network Planning - includes Fleet Scheduling– Revenue Management

• Managers will be appointed to a new structure on 3-Apr-00 to enable change

• But what is most important is how the organisation is structured ‘at the bottom’ - where the work gets done


Major change to OR at BA• Keith Rapley has left BA• OR now part of the Strategy Department• Structured into functional and

cross-functional teams• Work within a strong definition, i.e.

strategic consultancy, to maximise value• Formalise the movement of OR people

into the line• OR lost me!


Change to take advantage of e-Opportunities

• e-Procurement (suppliers) and e-Working (employees)

• e-Commerce (customers) - 50% on-line revenue by 2003

• e-Ventures (new internet businesses)– On-line ‘neutral’ travel agency– Air Miles on-line– Lifestyle portal


Renaissance progress• Mission remains to be world leading• Increased target - recognising that revenue

management is critical to the success of our strategy

• Completed the process and organisation design of the ideal capability (To Be)

• Completed system architecture gap analysis (SAGA)

• About to complete the implementation plan


Renaissance plan

• Integrated implementation in 6-month phases

• O&D Phase 3 will be embedded in the delivery

• e-Initiatives will be incorporated along the way

• Due to complete by end of 2001• Establish an environment of

continuous improvement


Transition Planning - focus on business capability and benefit

delivery• Business Capability Streams

– Improving existing capabilities– Developing new capabilities– Business cases with clear scope– Small focused teams enabled to make decisions– Whole department have opportunity to contribute

• Transition Framework– Coordinates implementation– Manages dependencies between streams– Integrates new capabilities with existing ones– Prioritises work and recruits resources– Plans further work


Renaissance method

• Objective - transform Revenue Management into a dynamic enterprise

• Stages -– Solution Creation - turning ideas and

theories into solutions within a creative environment

– Model Office - use a process lab to eliminate the risk in the solution

– Implement and measure performance

• Techniques - CBD and smart-sourcing


Component based development (CBD)

• An enterprise is a collection of capability components which cooperate by each using the services supplied by others

• A dynamic enterprise is an enterprise which can evolve (new components added, old ones removed) without having to stop

• A dynamic enterprise will operate safely and effectively if its components all obey three laws


3 laws for a dynamic enterprise

• A component, added to an enterprise, may not disrupt the behaviour of that enterprise

• A component using the services of another, does so at its own risk and must protect itself from damage

• A component offering a service does so at its own risk and must protect itself from misuse

• Reference - Peter Henderson, University of Southampton, UK


Some examples of high level capability components

Planning

Steering

TradingOpportunities

Forecasting

Monitoring

Optimisation

PerformanceManagement

Distribution

Management ofInformation

PartnerIntegration

Architecture

Infrastructure

Smart-sourcing


Working Business Plans

Network PlanOptimisation

Flow Plans

•Price•Demand•Yield•Cost•Channel

Business Plans &Financial Targets

MarketAreaView

RouteView

Schedule

NetworkView

Engine Numbers


Smart-sourcing

• On-site - staff at LHR headquarters• Off-site - Telephone Sales in

Newcastle• Off-shore - Revenue Management

Support in India• Automation

– In-house - O&D, GHOST (groups)– Third party - IDEAL (dealing), DSS

(decision support)


Summary• There is now unrelenting pressure for the

airline industry to continually change• British Airways is transforming its

Revenue Management capability to enable a flexible future

• Applying the technique of component based development (CBD) will facilitate this transformation

• Smart-sourcing of components will deliver the most efficient and effective solutions


‘Running an airline involves dealing with complex technology and

logistics. Yet, in the public perception, this is a very

straightforward business, centred on the simple proposition of bringing

together a willing seller with a willing buyer.’Colin Marshall

Acting Chief ExecutiveBritish Airways

world leading revenue management. renaissance at british airways adapt to survive paul beadsmoore...

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