Mercator Blog

Tom Bacon

Tom Bacon is an airline industry consultant based in Denver, Colorado. With 30 years experience in a variety of travel companies and business situations, he has a track record of dramatically improving profitability through innovative revenue strategies. He has led successful restructuring initiatives at American Airlines, SABRE, American Eagle, Bombardier Flexjet, and, through bankruptcy, Frontier Airlines. His experience extends through a variety of airline industry sectors including travel agency distribution, regional airlines, fractional airlines, international airlines and domestic low cost carriers.

Recent Posts

Managing Unforecastable Airline Demand

Consumer product companies, like airlines, regularly develop demand forecasts for thousands of products.  Retailers, for example, must forecast not just how many men’s shirts will be purchased but what styles, colors, and sizes, and at which locations.  In the case of airlines, we not only forecast demand for each of a thousand or so flights a day for the next year, but we often forecast 15 price points and 20 or more O&Ds on each flight. The numbers of individual forecasts can become overwhelming.

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Topics: Aviation, Revenue Management

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'Segment of One' and the Evolution of Airline Pricing

Airlines, like e-tailers and virtually all other e-merchandising companies, aspire to marketing to a “segment of one,” or highly customized merchandising approaches that account for individual purchase behavior in forming offers and prices. The concept of “segment of one” replaces traditional, broad-based segmentation between “business” and “leisure” and other conventional marketing segmentation schemes. The evolution of the industry from one fare to “segment of one” has taken fifty years, from de-regulation of the airlines in the late 1970’s up to today.  

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Topics: Aviation, Revenue Management

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4 Common Airline Revenue Management Roadblocks and How to Avoid Them

What’s the latest innovation in airline revenue management? What new algorithms or models are offered by vendors to help improve revenue forecasting or optimization - or better estimate price elasticity - or increase revenue integrity? Are you missing out?

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Topics: Aviation, Revenue Management

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Airline Revenue Management Strategy 101: It's All About Alignment

Revenue management has been long been touted as a strategic tool but what exactly is the “strategy” that is being referred to?  When it was initially introduced, the airlines which invested in revenue management technology pursued a quantitative and analytical approach that differentiated them from airlines with simpler pricing. But are “analytical” and “quantitative” still defined as a “strategy” that differentiates an airline from its competitors?

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Topics: Aviation, Revenue Management

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The Overbooking Debate: A Step Backwards for Airline Revenue Management?

There have been two major elements of airline revenue management from when the concept was initially introduced in the 1970’s: inventory controls and overbooking. Together, these are calculated to drive over 5% more revenue and are now considered a fundamental practice for airline revenue management. Both remain long-standing examples of airlines’ leadership in the application of big data analytics to drive improved profitability, and both rely on a combination of forecast algorithms and optimization models.

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Topics: Aviation, Revenue Management

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Third-Party Services: The Next Growth Opportunity for Airlines

Organic growth is very limited in mature air travel markets. In fact, most U.S. airlines faced unit revenue declines in 2016 as capacity outstripped demand in many markets. The largest U.S. airlines have embraced “capacity discipline” to keep unit revenue in check – increasing capacity in 2017 at 1-2% and shrinking in sectors experiencing limited demand growth. Acquisitions are of course, another vehicle for airline growth. The U.S. market has seen tremendous M&A activity over the past decade. In fact, it is now commonly believed that anti-trust officials would block further acquisitions by any of the four carriers that now represent 80% of domestic capacity (American Airlines, United Airlines, Delta Airlines, and Southwest Airlines).

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Topics: Aviation, Revenue Management

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