How to create a secondary marketplace with a success rate greater than 100%?

June 27, 2019

The revenue optimization module of Volantio’s Yana platform powers supplier controlled secondary marketplaces for airlines.

Airlines provide a benefit to flexible travelers on high demand flights who are willing to shift their travel schedules (these travelers are the “sellers”). This enables airlines to resell this inventory to passengers who want to travel on the high demand flight (the “buyers”).

As with any marketplace, the market maker (in this case the airline) assumes a certain degree of risk – if the airline does not resell the inventory, they ultimately lose money on that specific transaction. This is a particular challenge in industries (such as airlines) where the inventory is completely perishable. Volantio closely tracks the “seat resell success rate” – calculated as the percentage of seats “resold” that were “bought”, and we’ve provided a few examples above. The great news for airlines is that typically at least 90% of “bought” inventory is “resold”.  Even better, since resold inventory sells at a substantial premium to the purchase price, the marketplace is highly efficient – airlines typically clear 3x - 5x of the purchase price. But perhaps most interesting of all is that by leveraging the Yana powered marketplace, airlines can achieve success rates of greater than 100%. How? The answer to this question involves understanding the value of an empty seat as a function of the number of travelers who want to travel.  Imagine the hypothetical scenario. If my wife and I are traveling from Atlanta to London, and the 9 pm Delta flight has only 1 seat available, that flight is of no use to us (in fact it won’t even show up in the search results). If schedule is important to us, we will most likely book on another carrier departing at a similar time. By helping the airline buy back only

1 seat on the 9:00 pm ATL-LHR flight, Volantio’s Yana platform powers a marketplace where 2 seats can actually be resold, unlocking significant upside for airlines and mitigating the risk that loyal customers who cannot find the availability they want, will book elsewhere. Similar dynamics exist in a range of other industries – for example entertainment venues, tours, activities, and restaurants, to name a few. Supplier controlled secondary marketplaces in the airline industry are a new and exciting way for airlines to drive incremental profitability while making both buyers and sellers better off. Volantio is very excited to continue to be the largest player and innovator in this space. Please reach out with any further questions you have.