Amadeus launches Active Valuation for Airlines

Amadeus has launched Active Valuation, a new IT solution that enables airlines to maximise revenues across multiple channels. Lufthansa, Air Baltic, Singapore Airlines, TAM and Etihad are all Active Valuation contracted customers.

Active Valuation works by enabling the application of sophisticated business logic to dynamically adjust the yield (revenue expected) of an airline product, according to the context in which a booking is made. These yield modifiers are used in a seamless manner in order to perform an origin and destination (O&D) calculation. This allows a dynamic segmentation of customers, taking into consideration their characteristics, the point-of-sale used and any connecting flight data, in order to better capture their willingness-to-pay.

At the same time, Active Valuation can also be used to incorporate cost considerations into the availability decision process, for example costs related to the sales channel or to any fuel surcharges that may be applicable. In addition, this allows the airline to consider the indirect contribution of a given customer, such as loyalty, and the contribution to the network by looking at return trip criteria.

The new solution is designed to complement Amadeus’ existing Revenue Availability solution which has already been implemented by more than 10 airlines worldwide including Air France-KLM, Lufthansa and Austrian Airlines.

Revenue Availability works by allowing an airline to intelligently optimise its inventory in order to generate maximum return on a booking. For example, when a customer requests availability information for a multi-leg journey, the solution automatically considers the complete value of the trip and delivers appropriate availability information to the customer.

“We believe that Active Valuation will enable us to define and implement strategies in real time that can be applied dynamically on top of the revenue management controls. Through Active Valuation we will be able to apply decisive segmentation and differentiation strategies. This amplifies the benefits of using our revenue management system optimisation module,” said Günter Friedrich, VP Information Management, Sales and Customer Processes at Lufthansa. “As Active Valuation is part of the Altea Inventory, the accuracy and timely execution of the solution is as reliable as required by the customers / online portals. With this in mind, we hope to not only increase revenues but also help better reflect Lufthansa’s business policy with regard to individual bookings. The next step will be to share information between the airlines of the LH group and other partners to optimise the availability offering for connecting flights between partners. With the help of Amadeus, we hope to implement this in 2011.”

Julia Sattel, Vice President Airline IT, Amadeus, said, “Airlines are always seeking ways to incrementally increase yield and revenues without increasing processing costs. With this in mind, Active Valuation is a great example of how technology can improve profitability. The number of new customers for the solution demonstrates its ease of integration with the Altéa platform and its high performance generally.”

Both the Revenue Availability and Active Valuation solutions are fully integrated with Amadeus’s Altéa customer management suite enabling users to design and execute business logic from within the standard Altéa Inventory interface. The solution can also be easily integrated with existing revenue management systems. An airline must be using the Altéa Inventory solution in order to implement either Revenue Availability or Active Valuation and today approximately 100 airlines around the world rely on the Altéa platform to manage their inventory.

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