Seminar paper from the year 1998 in the subject Business economics - Supply, Production, Logistics, grade: 1.2, The University of Sydney, language: English, abstract: This paper discusses the practice of price differentiation in the airline industry and how airlines use yield management systems to control their different prices. Consequently it is explained how price differentiation is realised. Emphasis has been laid on discussing whether price differentiation is discriminatory and why it should be acceptable, even if it is discriminatory. In the second part the principles of yield management are explained and the major challenges with regards to the latest developments in electronic commerce are reviewed.

This book chronicles airline revenue management from its early origins to the last frontier. Since its inception revenue management has now become an integral part of the airline business process for competitive advantage. The field has progressed from inventory control of the base fare, to managing bundles of base fare and air ancillaries, to the precise inventory control at the individual seat level. The author provides an end-to-end view of pricing and revenue management in the airline industry covering airline pricing, advances in revenue management, availability, and air shopping, offer management and product distribution, agency revenue management, impact of revenue management across airline planning and operations, and emerging technologies is travel. The target audience of this book is practitioners who want to understand the basics and have an end-to-end view of revenue management.

This is the first comprehensive introduction to the concepts, theories, and applications of pricing and revenue optimization. From the initial success of "yield management" in the commercial airline industry down to more recent successes of markdown management and dynamic pricing, the application of mathematical analysis to optimize pricing has become increasingly important across many different industries. But, since pricing and revenue optimization has involved the use of sophisticated mathematical techniques, the topic has remained largely inaccessible to students and the typical manager. With methods proven in the MBA courses taught by the author at Columbia and Stanford Business Schools, this book presents the basic concepts of pricing and revenue optimization in a form accessible to MBA students, MS students, and advanced undergraduates. In addition, managers will find the practical approach to the issue of pricing and revenue optimization invaluable. Solutions to the end-of-chapter exercises are available to instructors who are using this book in their courses. For access to the solutions manual, please contact [email protected].

The Oxford Handbook of Pricing Management is a comprehensive guide to the theory and practice of pricing across industries, environments, and methodologies. The Handbook illustrates the wide variety of pricing approaches that are used in different industries. It also covers the diverse range of methodologies that are needed to support pricing decisions across these different industries. It includes more than 30 chapters written by pricing leaders from industry, consulting, and academia. It explains how pricing is actually performed in a range of industries, from airlines and internet advertising to electric power and health care. The volume covers the fundamental principles of pricing, such as price theory in economics, models of consumer demand, game theory, and behavioural issues in pricing, as well as specific pricing tactics such as customized pricing, nonlinear pricing, dynamic pricing, sales promotions, markdown management, revenue management, and auction pricing. In addition, there are articles on the key issues involved in structuring and managing a pricing organization, setting a global pricing strategy, and pricing in business-to-business settings.

Revenue management (RM) has emerged as one of the most important new business practices in recent times. This book is the first comprehensive reference book to be published in the field of RM. It unifies the field, drawing from industry sources as well as relevant research from disparate disciplines, as well as documenting industry practices and implementation details. Successful hardcover version published in April 2004.

For over three decades the airline industry has continued to maintain a high profile in the public mind and in public policy interest. This high profile is probably not surprising. There does seem to be something inherently newsworthy about airplanes and the people and companies that fly them. The industry was one of the first major industries in the United States to undergo deregulation, in 1978. It thereby transitioned from a closely regulated sector (the former Civil Aeronautics Board tightly controlled everyt thing from prices to routes to entry) to one that is largely market oriented. The incumbent carriers transformed themselves from the point-to-point operators that the CAB had required to the hub-and-spokes structures that took better advantage of their network characteristics. Further, they transformed their pricing from the quite simple structures that the CAB had required to the highly differentiated/segmented pricing structures (“yield management”) that reached an apogee in the late 1990s. Some ca arriers, like American, Delta, and United, were better at this transition; others, like Pan American, TWA, and Eastern, were not. What the incumbent carriers did not do, however, was deal with their costly wage and work rules structures, which were an enduring legacy of their regulatory period. This legacy, when combined with the high-fare end of the yield-management pricing structure, has made them vulnerable to entry by new carriers with lower cost structures.

The debate on the future of the aviation sector and the viability of its traditional business practices is the core of this book. The liberalization of the EU market in the 1990s has radically modi?ed the competitive environment and the nature of airline competition. Furthermore, the new millennium began with terrorist attacks, epidemics, trade globalization, and the rise of oil prices, all of which combined to push the industry into a “perfect storm”. Airline industry pro?tability has been an elusive goal for several decades and the recent events has only accentuated existing weaknesses. The main concern of ind- try observers is whether the airline business model, successful during the 1980s and 1990s, is now sustainable in a market crowded by low-cost carriers. The airlines that will respond rapidly and determinedly to increase pressure to restructure, conso- date and segment the industry will achieve competitive advantages. In this context, the present study aims to model the new conduct of the ‘legacy’ carriers in a new liberalized European market in terms of network and pricing competition with l- cost carriers and competitive reaction to the global economic crises.