Case Studies Revenue Management Airline Revenue Management

Project Objective

Develop a logic module for revenue management in order to maximize the airlines revenue. Integrate the module into the client’s in-house revenue management framework to improve their current forecasting, allocation and pricing processes.

Client
First & largest low cost carrier (LCC) to operate in the Middle East and North Africa.

Approach
1. Forecasting
i. Investigate various combinations of flight mapping rules and algorithms to determine the best method for forecasting.
ii. Study the effect of market trends, events, seasonality, day-of-week, departure time of day, fares and booking behavior (for re-forecasts) in order to arrive at the forecasting method.
2. Optimization:
i. Propose optimization algorithms that automatically determine which classes should be closed or opened at a DCP and also automatically determine the allocations for each class.
ii. The optimization algorithm would take into account historical and current booking behavior and arrive at DCP level booking limits.
3. Group Evaluation: Investigate decision support algorithms that automatically recommend a minimum (cut-off) price below which group should not be accepted.

Solution & Benefits
1. Forecast yield and booking considering the effect of market trends, events, seasonality, day-of-week, departure time of day, fares and booking behaviour.
2. Forecasts occur at fixed points in the life of a flight or when triggered by unusual booking activity.
3. Fare levels are decided based on yield forecast and dispersion in yield.
4. Determine the price point and allocation in each business type (One way, return & connection).
5. Flights would classify based on demand (Distress, Normal or Peak Flight).
i. Distress would open promotional class to boost demand on the flight.
ii. Peak flight would sell more seats at higher price.
6. Recommend which booking classes should be open/close.
7. Recommend a minimum (cut-off) price below which a group should not be accepted.
Exceptionally accurate forecasts (above 90%)
 
 
 
To develop a logic module for revenue management in order to maximize the airlines revenue
First & largest low cost carrier (LCC) to operate in the Middle East and North Africa
Maximize revenue, improve forecasting, allocation and pricing processes
- Broadcasting Revenue Management
 
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