This holiday season, I am sure all of you have been using comparison
engines, coupons to book your holiday travel options. Travel, flight, Indian
railways apps have also become very popular what with offers being tailored as
per your search options. Did you know that Airlines have been using analytics
for at least 3 decades — even before the term ‘analytics’ was coined?
Airlines have been segmenting their customers for a long time. They look
into travel patterns, passenger preferences, ability and willingness to pay and
many other facets of airline travel to provide a better customer experience as
well as generate maximum revenue.
American Airlines was one of the first airlines to appreciate the
value of revenue management and invested in a central reservation system to
track customer data. The revenue management team of American Airlines used
customer information, churned the data and looked for customer behavior insight.
Their target was to categorize passengers into multiple segments and charge
them differently for the same ticket.
This enabled the airlines to offer tickets at a lower cost to a
segment of the fliers, whereas for the same sector certain other segment got
charged higher. This differentiation was not only dependent on the flying
class, eg economy, business or first-class. Even within the same class, higher prices were
charged the closer to the day of departure.
At the same time, for business class passengers, corporate agreements
for certain total flying mileage a year saved corporates thousands of dollars.
American Airlines perfected their analytical ability so much so that after 9/11
it was the only airline which did not file for bankruptcy in the USA.
Analytics by Indian Airline organizations
In India the brightest example is Indigo. With 100 aircrafts and more
than 600 flights a day, Indigo controls more than a third of Indian market
share. At the root of Indigo’s success lies the facts that the organization
recognized early on that an aircraft is profitable as long as it stays in the
sky and aviation fuel is the most expensive variable to be managed. Indigo
analyzes fuel efficiency on ground, and detailed cost analytics at every step
of its operation to track profitability. Indigo also uses only one type of
aircraft Airbus A320 so that inventory of spare parts can remain limited and
crew availability is ensured.
The sheer volume and variety of data all commercial organizations get
when their clients use their apps are enormous. The organizations are at a
stage where they are drowning in data and realize that its potential is
unlimited, but are not necessarily able to exploit the vast treasures of
knowledge by mining the data. Without going into any technicalities, Analytics
may be defined as an intelligent process of converting collected data and
information into knowledge for improved decision making.
The knowledge, like priceless
gems, will lead the organization in its future endeavors. Instead of depending
on a few stakeholders’ opinions and sentiments about the market and possibly
biased thought process, trained Analytics practitioners help guide a business
through the path shown in the data and provide the knowledge required for
Srabashi Basu – Program Chair -Analytics,
SCHOOL OF MANAGEMENT
MA (Statistics – The Pennsylvania State University). M. Sc. (Statistics – The
University of Calcutta)
About Srabashi Basu:
Dr. Basu has statistical and analytics application experience spanning over two decades in research,
teaching and industry. Srabashi started her career in United States working in pharmaceutical industry and then shifted to health science research. In India, Srabashi took up a faculty position in Indian Statistical Institute, one of the leading institutes in the world for core statistical research and training. She worked
there for over a decade teaching and publishing regularly in various national and international peer-reviewed journals.
She has authored over twenty original papers and has contributed several book chapters.
Srabashi has always been interested in application of statistics and analytics in business related matters. After Indian Statistical Institute she took up a managerial position in Skytech, a niche company in travel analytics. Srabashi worked on several interesting projects, such as viewers’ expectations for a vernacular news channel, developing rank orders for potential customers on behalf of a micro-finance company, scoring various brand stores of men’s attires in a specific catchment area and profit maximization for non-life actuarial agency.