Odyssey –a revenue management system fit for dynamic challenges

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The Odyssey system dynamically determines the optimal bid-price on a range of some 15-20 price-points per O&D. The more price-points an airline can offer, the better it can ‘skim the price curve’, by more often quoting the price closest to the individual customer’s bid-price (the highest price they are prepared to pay).

“Innovation isn’t about putting your feet up and stargazing”

KLM RetroAnother major advancement is the so-called O&D logic embedded in the system,” explains Maarten van der Lei, VP Pricing & Revenue Management Europe. “With a traditional segment-based RM system, if you said you’re flying Amsterdam-Tokyo, it would optimize Amsterdam-Tokyo; and if you’re flying Amsterdam-Oslo, it would optimize Amsterdam-Oslo. But this POS (Point of Sale) O&D system simultaneously optimizes the total network, looking at all relevant O&Ds (e.g. not just all connecting flights into Amsterdam on the one hand and all connecting flights out of Oslo on the other; and then all the connecting flights to those connecting flights, and so on spreading outwards).

Not a traditional Revenue Management System

In addition, traditional systems can only open or close a class or price-point for all O&Ds. But with the new POS O&D system, which uses a threshold system, some POSs/classes can be open and others closed. This is because the system looks at the value a given POS brings to the network as a whole. It’s also an important advance.

“Suppose you have lower-yielding traffic out of Poland connecting in Amsterdam to North America, but higher-yielding traffic out of the Netherlands to North America. In a segment based RM system, you would either close the whole class too late and allow too much lower-yield traffic out of Poland or close it too early and not allow sufficient higher-yield traffic out of the Netherlands.” Another example of how the new system removes even more ‘guesswork’ elements than the old one did.

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