Revenue Management for Airline

Revenue Management

Revenue Management (RM) is the process of maximizing revenue by selling the right product, to the right customer, at the right price. It combines knowledge about market segmentation for pricing along with advanced statistical analysis to increase revenue. Price discrimination is the key factor for revenue management.

Where Does RM Apply?

Opportunities for revenue management arise when:
  • inventory is perishable,
  • capacity is fixed,
  • market segmentation based on willingness to pay is possible,
  • sales are made in advance, and
  • fixed costs are high and marginal low.

Airline RM

We have developed a RM system for a low-cost carrier (LCC) in the Middle East and North Africa is to identify appropriate algorithms for forecasting booking demand, allocating inventory optimally, and price individual seats and group bookings to maximize revenue. The algorithms are integrated an in-house revenue management framework developed by the client.

1. Forecasting module: which forecasts unconstrained demand by flight, date, business type and booking class.
2. Allocation module: which determines optimal inventory allocation by flight, date, business type and booking class and supports group evaluation.
3. Pricing module: which determines optimal price for each seat by flight, date, business type and booking class to maximize revenue.
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