1. World Leading Revenue Management

2. Renaissance at British Airways Adapt to Survive Paul Beadsmoore Renaissance Architecture (role) Principal Business Analyst (job) Business Solutions (team)

3. World Leading Revenue Management 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

4. World Leading Revenue Management 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

5. World Leading Revenue Management 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

6. World Leading 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

7. World Leading Revenue Management 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!

8. World Leading Revenue Management 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

9. World Leading Revenue Management 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

10. World Leading Revenue Management 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

11. World Leading Revenue Management 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

12. World Leading Revenue Management 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

13. World Leading Revenue Management 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

14. World Leading Revenue Management 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

15. World Leading Revenue Management Some examples of high level capability components Planning Steering Trading Opportunities Forecasting Monitoring Optimisation Performance Management Distribution Management of Information Partner Integration Architecture Infrastructure Smart-sourcing

16. World Leading Revenue Management Working Business Plans Network Plan Optimisation Flow Plans Price Demand Yield Cost Channel Business Plans & Financial Targets Market Area View Route View Schedule Network View Engine Numbers

17. World Leading Revenue Management 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)

18. World Leading Revenue Management 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

19. World Leading Revenue Management ‘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 Executive British Airways

20. World Leading Revenue Management