A Conversation about the Evolution of Etihad Airways, Episode 4

PROS Travel Podcas, Season 1, Episode 4: A Conversation with PROS Justin Jander and Siva Arunachalam of Etihad Airways
In this episode, we chat with Siva from Etihad Airways. Siva and PROS Justin Jander talk about the value of science in revenue management and the evolution of Etihad.

Siva has been with Etihad for his entire career, having joined when Etihad was a mere five years old. Headquartered in Abu Dhabi, Etihad is a fairly new airline, founded in 2003. In his role in Operations Research, Siva has seen Etihad and its employees and processes grow and mature. As far as the future of Etihad, Siva thinks that technology will bring rapid change and empower people in their evolving roles.

You can listen to The View from 30,000 ft. on Apple Podcasts and Spotify. Or listen to the full audio version below.  
 

 

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In This Episode

[01:05]: Siva’s Journey at Etihad
[03:40]: How would you describe RM to people outside the industry?
[05:08]: Etihad’s unique approach to operating in the Middle East
[07:05]: Explaining Bank Structure – Connecting via Abu Dhabi
[09:45]: How does Science fit into the Revenue Management Process?
[17:45]: Where will RM go in the next 10 years?

Full Transcript

Speaker 1: Hello and welcome to the PROS Travel Podcast series, the view from 30,000 feet. I'm your host, Aditi Mehta. In this episode, Justin Jander and Siva from Etihad Airways discuss the value of science and revenue management and the evolution of Etihad. Let's listen....

Justin Jander: My name is Justin Jander. I'm a Product Manager at PROS, with the Revenue Management Products and I'm joined today by Siva and, let you introduce yourself.

Siva: Thank you, Justin. I'm Siva, I'm from Etihad Airways. I'm a senior manager in operations research and I head the Systems Signs and Processes Team in revenue management at Etihad.

Justin Jander: Great. So today we're going to ask you some questions around your role, the future of revenue management, all different tracks things. We'll dive right in.

Siva: Sure, let's go.

Justin Jander: I guess you described your role already, but can you tell us how you ended up at Etihad and what your path has been throughout the time you've been there? How long have you been there? All of those kinds of things.

Siva: That's a long story.

Justin Jander: We have plenty of time.

Siva: I started my career with Etihad, I could say that's my first job and it's a long first job from that sense. I'm almost done 10 years in the airline. I passed out of London School of Economics. So you have a colleague who is my classmate.

Justin Jander: That's right.

Siva: We worked and brought together into Etihad, and Etihad was only five years old. The airline was looking for people with math, statistics and operations resource capabilities to build on a budding airline and make its inroads into revenue management. I've had the greatest of mentor that I can ever ask for [Bhaskar]. He employed me in Etihad and he was only like six months old in the airline then. He saw something in me, which I didn't see as well then.

Siva: He got me in and we started pretty much very slow with doing the smallest of [inaudible] realignments. But then the journey was set on several people changed and several atmosphere change. But him and the motivation that I always got in the environment hooked on to it, and I had something very solid to work on, which was [inaudible] for the while, and as you know it's from the lake base to the [inaudible] to the [inaudible] India and hybrid and so on. It's been a success journey from that perspective. That's been something fascinating. In terms of my role I've switched back and forth and I think that has been great for me, overall. My boss, as I speak, he saw the way that I should lay my foundation in the career. So when I started I did little projects to start with and then he put me on as a flight analyst in the lake base role.

Siva: So actually switch regions from being a Middle Eastern Flight Analysts who would manage flight level demand and availability and then move on to Australia, far East, and then moved down to Europe, and also manage North America. So that greatly gave me the biggest of insights and platform to actually understand travel patterns and demand from the eyes of a user.

Justin Jander: Sure.

Siva: This with the knowledge that I have on systems and technical capabilities greatly enhanced me later as I moved on to implement more in the system and take leverage on what's a better system to have. Is it fully science-based or is it fully guts-based from a commercial perspective? I think these combined, and I feel like I'm a unique blend where I can call as Etihad myself, than having another airline experience that has a different leverage in it.

Justin Jander: We were just talking outside about describing what we do to other people. I think that's a good question too. If you had to describe what revenue management is to somebody that isn't an expert, but knows the airline business, what would you say revenue management is really all about?

Siva: Probably that's the most difficult question after all the 10 years I worked-

Justin Jander: You can probably just say that people want you to say, "That's why I pay so much for tickets." Right?

Siva: Yeah. I think that's what I've actually eventually come down to see as it is. When I started trying to explain, it was a 30 minutes explanation. They finally said, "Okay, can you explain? What are you saying?" I said, 'Okay, it's not going to happen so easy." Then I referred textbook and online mediators and I said there is no easy way to translate something what I do in a small space of time to say, "Okay, what word it means actually," but I think eventually now people also understand prices better, and you know there is a big shift in people's knowledge of how airline price, not the details of it, just the fact that prices change over time and everything. So I simply stand there and say, "I'm the guy who's responsible for that changes you see."

Siva: So I say, "If you want to bash me and show you somebody is else, then if you'll be happy with it, then it's me who goes behind all these things."

Justin Jander: I always like to have a joke, that when people say it on a plane, I say, "Well did you buy the ticket?" And they say, "Well yeah I'm here." And I say, "Well then it wasn't too expensive because you still bought the tickets. So you can't be that mad about it." But that's one of the ways that you can feel. But nobody's ever satisfied with how much they pay.

Siva: That's true.

Justin Jander: So you've talked a little bit about Etihad already. Can you tell us, we know it's in the Middle East and Abu Dhabi. Can you tell us about what the model is for the airline a little bit and what makes it unique, and how the structure of the airline works and all that?

Siva: Sure, it actually it's quite interesting because when Etihad was started in 2003, it was one of the youngest Airline in the Middle East. And you had two prominent established careers in the middle of space of things. The airline found its own identity, and it had a strategy and a vision on where it wanted to go. And that mainly was to show Abu Dhabi to the world, and also connect passengers from East to the West. And in doing that, I think the arenas adopted various strategies and each of it had paid its own dividends in how successful they land grew.

Siva: So one way of actually [inaudible] in the world previously with the strategies that we adopted was doing partnerships. And I remember in 2010/11 when I came for the first press conference, a lot of people who are not exactly airline background people would ask me, "Okay what is Etihad?" But a couple of years later when we had went in for a major acquisitions and stakes in different airlines, it shot to fame very quickly. And there was a lot of recognition and how we went about, but amongst all these, the main focus that we maintained was how do we connect with Abu Dhabi to the world, and bring people to Abu Dhabi to build Abu Dhabi tourism, as well as awareness in what Abu Dhabi is exhibiting. You have to sit there and Ross was there from PROS Science and he said, "Why don't you bring me back more often." Because there's a lot of exciting things that the city has built.

Siva: And given that the city's also fairly young, it had the infrastructure and the platform using latest technology to build itself. So it has amazing theme parks and many things. So that's been the main focus of how we go about it. So we relied on two bank structure, three bank structure and we finally come towards-

Justin Jander: Sorry to interrupt. Can you explain the bank structure thing to our audience?

Siva: Okay. So banks structures by that I mean that you bring in a lot of flights who arrive into Abu Dhabi at a given time, and then you have flights connecting from over Abu Dhabi in relatively some space of time to carry all these passengers to a different place. So that's what you call is collecting traffic for us.

Justin Jander: Right.

Siva: And that we have two bank structure. What I mean by that is people from Europe, and Australia, or even Abu Dhabi and they exchange passengers to go to the other side of the world. This happens during the day and this happens during the night.

Justin Jander: So yeah, I think it's an interesting point about the bank system because I don't know that all travelers really actually notice that all of the flights from the US land basically at the same time into Abu Dhabi. And then there's a set of flights that take off from Abu Dhabi to the far East in the Middle East, and into the Southeast Asia, India and so forth. So those are those banks you're talking about. And I think it's an interesting concept because it really sets up for being a connecting setup, and obviously connecting traffic is very important to at Etihad, which is of course why you had the PROSAC and D system really understanding the flows across the network and so forth.

Justin Jander: So I definitely think that's really interesting. And one other point I think you mentioned about Abu Dhabi and I went for the first time I visited you guys in Abu Dhabi in 2012 was the first time, and it's really interesting just how different it is from the last time I was there to the first time just how much it's grown and how different it is. And it really speaks to what you're talking about the growth of the city itself. It's not just a connecting point onto the world. It's also a place that people want to do, which introduces the opportunity for your stopover. So people stay for a little while and then go on to their next destination. And of course one other thing I really like about it is the Etihad residents on your 83 eighties I think.

Siva: Yes, that's right.

Justin Jander: Of course, I've never flown it but I would love the opportunity to do it, because it's you know-

Siva: You should try it out some.

Justin Jander: And I might need a Non-Rev ticket for that too. That's if you give those out.

Siva: I haven't been privileged to get one later but it's actually as a demo suit at the [inaudible], the formula one race type weather place and also there is another place called the Innovation Centers, slightly down the bridges. We actually have a model of the residents so you could go and try.

Justin Jander: Cool.

Siva: And we do showcase that in lots of air travel shows in reason one in Dubai, as well as, in Saudi Arabia. So people get a glimpse of what it feels like. So you could think about that as the next honeymoon.

Justin Jander: I'll definitely tell that to my wife. I think that'll be good. And I think this is a good segue into revenue management, because you can see that at Etihad is clearly big on innovation, new ideas, things that are outside the box. So the residents is something that's never been done in commercial air travel before. And it's something that's been I think relatively successful for some not having to rent a private jet to fly from New York to Abu Dhabi.

Siva: Certainly.

Justin Jander: But that I think I also see that's the case on the revenue management side as well. It's an opportunity where we partner a lot. We've had you give us some descriptions of what you've done with us and those things. So I guess let's talk first about how the science fits into your revenue management system. What's the importance of science to the system and what do you think, and why is it so important?

Siva: It's a great question it defines my job to start with.

Justin Jander: So it's good that science exists and if that's part of your job.

Siva: Yeah, definitely. So that way I'm a big advocate offered but I mean having done both sides of the job on the commercial side as well as on the system side, I come to appreciate the nuances of why scientists so important. I mean talk about today's, I mean in one word I would say science in broad definitely is, but about talk about today's world, the simple answer is with big data, the storage becoming cheaper and you get getting more and more data. You can make a lot of decisions without science because there's just so much data.

Siva: You got to put something around it, which gauges decision and your logic are more static over time, and there is far more patterns to be heard than what you think data is in that process. But from a user perspective as well, I've seen that people have come to appreciate the importance of science over time significantly. There was a time you could talk about a transition in itself. When you end the Lake based world, people could comprehend these forecast and say that I think this slide will go 90% full, because they have a good rich history about it. So I think back in the day in the lake based system, eight lanes and item look for a lot of people with a lot of experience, because they were looking at people who can manage a given flight and understand that more than you know, what the science has to offer at that point of time.

Siva: So the way I see those, if you're to talk about an exponential go on the negative exponential. The negative exponential is the experience that you want with the people over time. And the exponential is actually the science that has grown up in people's, the level of complexity that system is able to handle today. So from that aspect, what I see is people have also come to appreciate because when you could prove to people that you could make seven decisions today, tomorrow you have to make 7 million decisions. They realize that quickly that I have to relieve my hands out and I have to go to a much broader level to be able to look at these things. So I feel science had an adoption in itself across airlines, and departments, and I think it's quite a mature stage where you could say the adoption is better, as well as, people appreciate the value of saints and talk about machine learning and big data, that's a separate, you'd say the budding thing from a people's perspective toward what it means to them.

Justin Jander: Right. Yeah. I think it's really interesting because you're able to ... People coming into the role are more exposed to the science now, so they're able to sort of appreciate the thing. And one thing you said that I think is really good is that people can comprehend making a hundred decisions. They can process through that with a leg level, a few flights, that sort of thing. But as soon as you broaden out to the O and D level, it was suddenly so many things to process.

Justin Jander: And that's what I always use, is that the system needs to create that baseline. The users still play an important role, but the system has to create a good baseline because it's impossible to create that just from looking at every single thing. And so I guess on that topic though, it'd be interesting to get your perspective on what are the users that ... what skill set do you bring in at Etihad, and what are you looking for, and how has that changed from when you started 10 years ago to what you have today, and have you seen a difference and what person are you looking for? And obviously you came from the London School of Economics, right?

Siva: Yes.

Justin Jander: So clearly that's a focus, but what else did you look for in that?

Siva: Yeah, I think back in the day I was not recruited. I was a budding analyst to start with. But I would say based on what I've seen with people around a lot of Revenue Management was not a mandatory department in an airline, that's my first understanding when we started. You could fly a plane just selling whatever you wanted to sell. So a lot of people who actually moved into Revenue Management were natural transitions from reservations, operations who understood these better in terms of how the airline would work. So you could see a lot of experience coming in from that. So not exactly, you'd say heavy analytical skills were driving behind that. But over time as you moved into the O and D world, airlines realized the value of actually picking up people who have a lot of analytical base. And I think that something that have seen quite significantly. So even from the talent perspective you could actually recruit a lot of people who are one year, two year experiences, but have a lot of analytical skills.

Siva: But with that you also see certain limitations. What the other set of people always had. So we really quickly realized that we need to have a blend of both in the world until the time that we are mature in how we go about handling that. So that's something we successfully managed to transition into is well now over time where we have people with five, six years of experience, who have expert skill knowledge on the system as well as the comprehension of how they need to look at market. Because you do need to have a different lens when you look at the market. You can't be talking exponential demand to the sales team. So you need to know how to comprehend that. So I think all of these were different blends in how actually people transcended. So today you would look at somebody to jump into the job with one or two years of experience.

Siva: But having strong analytical background, mainly with the view not to do the analytics, because there are many software like PROS is doing it. But to be able to trust the system, like think about what Michael Woo was saying, "AI will not have a third option until people start trusting it. Even though you cannot comprehend it."

Justin Jander: Sure.

Siva: I know in the summer like that I don't think most people at the user level know the nuances of how different parameter works into the guillotine, but they're trusting that PROS is doing this and you have measures that gives comfort around how good is the system going forward.

Justin Jander: Right. I think that's an important distinction. And you know on the user side we've been sort of saying that the users are headed more towards like a market analyst, and truly being an analyst like a stock analyst type of thing where you're trying to predict the future. But there's obviously algorithms that help with stock analysts, but there's also they have to use their insights and we've seen it be a parallel to that where it's you want to you want the person to supplement and compliment the algorithms that are there, and you need the skill set to think critically, review the numbers and then project forward with their estimates.

Siva: You are very right. Actually, that's one of the reasons that leader, our VP, had to wishing two years back and he saw that the way airlines are headed and the world is headed, it's more toward retail management. So he actually set up a team, 18 months back called the Digital Retail Management, which would look at airline from different aspects and be able to look at it from mainly from a customer perspective, and also internally within revenue management. He redesigned the role for Demand Analyst and a Pricing Analyst, and he merged them both to call it the Manager Pricing Demand, especially with the vision to have an outlook where it's not demand of price, it's combined. You need to have a vision of how you set it up for the customer. And we have learned and matured in that phase as we go along and I think we are definitely ready for a future, which I do think that many organizations would start to transition at some point of time when they're ready.

Justin Jander: Well, that actually is a great segue into my next question, my last question. So where do you see the revenue management space going in the next five to 10 years? You gave a little bit of insight there. You've talked about artificial intelligence a little bit. You've talked about combining the role of price and demand into a single, it's a one function at that point. So where do you see it all going in five to 10 years? Where do you think it's going to go and where do you want it to go as well?

Siva: That's an amazing question. I mean, I would be afraid to answer that and look back after 10 years to see what I said.

Justin Jander: Well, we're definitely recording this, so we'll be able to do that.

Siva: But I think it's going to be rapidly changing, simply because of the advent of technology. So what I can think is pretty much my vision in terms of where I see three, four, five years in terms of what the possibilities Etihad could potentially explore. ,So I'm going to be very creative in saying this. I don't even know if that's going to be the extreme of how it's going to do. I pretty much see a lot of the departments in the structure that they are to actually collapse and things might transform more into a team, but having seven processes and you know each processes is a team in terms of how they execute it.

Siva: So you think about the skill sets and the skill set is going to be extremely dimensional, and quite adaptive towards the next process that given process skill set is actually going to carry out, because you're going to look at everything as the leaders like Amazon show us, that you've got to look at everything from a customer perspective. So people don't even know what revenue management as a department exists, because it's only very relevant in a perishable field as we say. Right?

Siva: So I see that the internal departments will realign itself, processes will define what roles people will do. Skill sets will hugely vary with technology, empowering people in that space. So and instead of revenue management maybe for now for simplicity I would say offer management to start with, and I think offer management is going to transcend not only just what people pay, but also in terms of what people choose to pay.

Justin Jander: Sure.

Siva: And maybe they would, I don't know, people would go to price and if the system would go back and say, "I cannot offer you the price right now but wait for a while and let me see if I can give you that price." Maybe something like that in that direction, and also products like ancillaries and everything going on and so forth. And I think one thing I could predict in terms of air industry would lead into is then buying individual tickets.

Siva: I see a school for subscription modeling, because with more awareness that's going in, the only way you're going to retain people despite the oddity that you may have is, how well you're tying your customers to yourself. While you could say loyalty program is one, I think that is a great scope in being very creative.

Justin Jander: Sure.

Siva: The likes of Netflix and Amazon Pay and many things that are coming forward, I think that's going to grow significantly big in how airlines might shape the market shares between themselves, and how they go about, it's going to be very interesting.

Justin Jander: It's definitely interesting and that's one thing that's very true about the airline industry is it's always evolved just all the way back from when the first commercial flight started to today, if you think about just how much things have evolved and how different it is, it's clearly a changing industry and it's really cool to be a part of it too. And yeah, so it's been good. And so yeah, I think that that covers what we wanted to have today. I really appreciate your time and this has been really interesting and we look forward to talking to you more and continuing the conversation over the next five to 10 years and we're definitely going to keep this and see how close you were for that. So.

Siva: yeah, sure. Thank you and thank you for having me. I think PROS and Etihad have been long partners and continued partners in the space, and it's one of the main reasons I rejoiced the role that I do, in terms of the partnership I had with you, earlier with John, have with you continue to have you-

Justin Jander: Yes, definitely.

Siva: ... and venturing into GSO as well from that perspective. And I think the extended team of PROS has been great.

Justin Jander: Sure.

Siva: And I wish it continues to grow.

Justin Jander: Yeah, definitely. And we value the partnership as well. So thank you very much. I appreciate it.

Speaker 1: Thank you for listening. And a special thanks to Siva from Etihad Airways for taking the time to talk with us. This podcast is brought to you by PROS travel and was recorded at our annual user conference in Las Vegas. At PROS, we help airlines on their journey toward offer optimization and digital transformation. For more information, please contact PROS.

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