Revenue management(RM), the practice of selling identical seats for different prices to maximize revenues, is concerned with making efficient use of a resource that becomes worthless after a given time. RM has been considered as an important business ...
Revenue management(RM), the practice of selling identical seats for different prices to maximize revenues, is concerned with making efficient use of a resource that becomes worthless after a given time. RM has been considered as an important business philosophy for many years in the airline industry. Typically, with the revenue management system, airlines can take the additional revenue by 3~8%, which may go straight to the increase of airline's net profit. However, most airlines today are using it to manage revenues from seat control, ignoring revenues from a pricing strategy. Well-known and proven revenue management techniques for demand forecasting and optimization were only applied to the management of seat control, leaving potential revenue opportunities in managing fares. However, if properly managed and controled, a pricing scheme may be desirable and provide a great opportunity to enhance an airline's total revenue.