Brand and culture are a huge part of your corporate identity. Furthermore, when your division is only 10%of total revenue there is a tendency to follow the ‘if it is in not broke’mantra. Pricing pressure from the two largest airlines were pushing margins even tighter. Thus, a need to understand where and how price could be eked in select regions was needed in order to match the other large players in the industry
Institutionally the company always considering themselves a low price, family friendly player in the marketplace. Given the sheer number of flight and domestic network, underbelly cargo was a natural segue to help propel the company. Originally,brought in to find cost savings a Pricing Readiness Assessment and Data Diagnostic were utilized to understand the opportunities available to senior management.
After reviewing data, surveying customers, and gaining a better understanding of the business operations differential 17 projects were identified for the company. Also, due to the unique nature of the company, they developed a different go-to-market operation than their larger competitors. Instead of a hub and spoke system, they chose a direct routing, for underbelly cargo this might more than 98% of flight paths were same day. Competitively this was an ultra-premium service that was being price matched at the commodity level.
Immediately, new products, product portfolio, and list prices were established understanding the value to the marketplace.
• Removed the bottom tier of products from a large portion of customers segments, allowing for competitive flights and customers to self-select out of the higher prices
• Project positive ROI was realized in the first quarter and overall profitability of the business unit increased by 47% in the first year of implementation
• Profits from the redesign of product offerings allowed for a complete overhaul of business processes. Allowing for an increase in the spot market participation rate to increase from 70% to over 90%
• Mean time to respond to RFP’s decreased by 33%,resulting in higher win rates, final offers and a better customer experience
• ROI for the following 12 months from project completion: Over 20X
