SlideShare a Scribd company logo
1 of 12
Download to read offline
YIELD MANAGEMENT
IN THE AIRLINE INDUSTRY
•  Originally as an airline industry concept
•  Adopted by service organizations across all
spheres
•  Limited research on its exact effects on
business-to business relationships
•  Limited knowledge about how feelings of
price fairness affect loyalty
YIELD MANAGEMENT
BLOG.TTS.COM
The main goal of yield management is to maximize
the revenue with the help of effective management
of three essential domains:
•  Pricing strategy
•  Control of availability: total number of empathy seats on
board of the aircraft
•  Inventory control: depends on the availability of resources
such as aircraft, gasoline and employees
DEFINITION by Wang & Bowie
BLOG.TTS.COM
•  Most airlines who began to practice the concepts
of yield management saw a direct increase of
3-7% in revenue
•  Success cases: American Airlines, Delta, Marriot
Hotels, among others
•  Also used by travel agents who used it to
generate the maximum possible revenue from
their holiday packages
PROFITABILITY
BLOG.TTS.COM
So how does the
yield management
system work?
BLOG.TTS.COM
EXAMPLE
BLOG.TTS.COM
A flight that has two fare buckets: discount price and full price. The flight has
200 seats that are available for an early morning flight on February 16th.
The flight should easily be able to sell off all seats at a discounted price, but it
understands that an increasing number of customers will be willing to pay
full price for seats as February 16th gets closer.
To make things easier, we further assume that the leisure demand occurs
before business demand. The next thing to do is to determine how many seats
the airline should sell at leisure fare and how many seats should it protect for
people who would pay full price.
If the airline ends up protecting too many seats, it faces the risk of flying with
empty seats. On the other hand, if very few seats are protected the airline
might end up losing out on extra revenue that is usually generated from the
business fliers.
In order to differentiate between the two groups, the airline often introduced
barriers or “fences” between the two market segments.
For example, the airline might phase in the full fare seats as the flying date
gets closer and phase out the discounted seats. Since holiday fliers are
expected to reserve their itineraries in advance, they are more than likely to
make the most of the discounted fares. On the other hand, a majority of the
business trips are decided within a week or two from the date of travel. This
allows the airline to collect full fares from business fliers.
The same example can be used in the case of a hotel - read it here!
EXAMPLE
BLOG.TTS.COM
How does it impact on
customer feelings
of price fairness and
customer loyalty?
BLOG.TTS.COM
IMPACT
BLOG.TTS.COM
•  Customers consider the price to be unfair
when they realize that the airline is using
price strategies to generate profit
•  Ends up having a negative effect on leisure
travelers because business travelers are
less price sensitive
•  Price fairness is not a proper predictor of
loyalty, there are other factors at stake
ULTIMATELY…
BLOG.TTS.COM
•  Yield management works best in situations where
demand exceeds supply
•  It allows the industry to choose the demand it wishes
to address in order to maximize the revenue
•  However these systems can also be used when supply
exceeds demand to phase out bookings in a manner
that allows the company to achieve the best possible
revenue generation, given its constraints
BLOG.TTS.COM
tts.com
youtube.tts.com
linkedin.tts.com
facebook.tts.comblog.tts.com
googleplus.tts.com

More Related Content

What's hot

Airline Business Models and Competitive Strategies - virtual simulation course
Airline Business Models and Competitive Strategies - virtual simulation courseAirline Business Models and Competitive Strategies - virtual simulation course
Airline Business Models and Competitive Strategies - virtual simulation courseIATA Training & Development Institute
 
Organisational structure of airline industry
Organisational structure of airline industryOrganisational structure of airline industry
Organisational structure of airline industryJetline Marvel
 
Airport Operating Cost
Airport Operating CostAirport Operating Cost
Airport Operating CostKLIA COLLEGE
 
Pricing and Revenue Management
Pricing and Revenue Management Pricing and Revenue Management
Pricing and Revenue Management Mihran Kalaydjian
 
Southwest airlines swot
Southwest airlines swotSouthwest airlines swot
Southwest airlines swotAsmat Mak
 
Airline Cost Route Profitability System
Airline Cost  Route Profitability SystemAirline Cost  Route Profitability System
Airline Cost Route Profitability Systemsamissac
 
Southwest Airlines
Southwest AirlinesSouthwest Airlines
Southwest AirlinesDhananji Jay
 
Strategic AIrlines Management 5. unit cost
Strategic AIrlines Management 5. unit costStrategic AIrlines Management 5. unit cost
Strategic AIrlines Management 5. unit costNarudh Cheramakara
 
Introduction to Airline Industry
Introduction to Airline IndustryIntroduction to Airline Industry
Introduction to Airline Industryvivianmeril
 
Marketing of airlines ppt
Marketing of airlines pptMarketing of airlines ppt
Marketing of airlines pptvaibhav makwana
 
Air transportation history
Air transportation historyAir transportation history
Air transportation historyRoyB
 
Airline Marketing 3. the airline markets
Airline Marketing 3. the airline marketsAirline Marketing 3. the airline markets
Airline Marketing 3. the airline marketsNarudh Cheramakara
 
PASSENGER TARGET MARKET
PASSENGER TARGET MARKETPASSENGER TARGET MARKET
PASSENGER TARGET MARKETNova Torres
 
Building fare Calculation_PPT_BY FADIL
Building fare Calculation_PPT_BY FADILBuilding fare Calculation_PPT_BY FADIL
Building fare Calculation_PPT_BY FADILfadil shamtally
 

What's hot (20)

Airline Business Models and Competitive Strategies - virtual simulation course
Airline Business Models and Competitive Strategies - virtual simulation courseAirline Business Models and Competitive Strategies - virtual simulation course
Airline Business Models and Competitive Strategies - virtual simulation course
 
Organisational structure of airline industry
Organisational structure of airline industryOrganisational structure of airline industry
Organisational structure of airline industry
 
Airport Operating Cost
Airport Operating CostAirport Operating Cost
Airport Operating Cost
 
Airline Industry
Airline IndustryAirline Industry
Airline Industry
 
AIR TRANSPORTATION
AIR TRANSPORTATIONAIR TRANSPORTATION
AIR TRANSPORTATION
 
Pricing and Revenue Management
Pricing and Revenue Management Pricing and Revenue Management
Pricing and Revenue Management
 
Southwest airlines
Southwest airlinesSouthwest airlines
Southwest airlines
 
Southwest airlines swot
Southwest airlines swotSouthwest airlines swot
Southwest airlines swot
 
Airline Cost Route Profitability System
Airline Cost  Route Profitability SystemAirline Cost  Route Profitability System
Airline Cost Route Profitability System
 
Southwest Airlines
Southwest AirlinesSouthwest Airlines
Southwest Airlines
 
Strategic AIrlines Management 5. unit cost
Strategic AIrlines Management 5. unit costStrategic AIrlines Management 5. unit cost
Strategic AIrlines Management 5. unit cost
 
airline deregulation
airline deregulationairline deregulation
airline deregulation
 
Introduction to Airline Industry
Introduction to Airline IndustryIntroduction to Airline Industry
Introduction to Airline Industry
 
Marketing of airlines ppt
Marketing of airlines pptMarketing of airlines ppt
Marketing of airlines ppt
 
Air transport
Air transportAir transport
Air transport
 
Air transportation history
Air transportation historyAir transportation history
Air transportation history
 
Airline Marketing 3. the airline markets
Airline Marketing 3. the airline marketsAirline Marketing 3. the airline markets
Airline Marketing 3. the airline markets
 
Air Transport
Air TransportAir Transport
Air Transport
 
PASSENGER TARGET MARKET
PASSENGER TARGET MARKETPASSENGER TARGET MARKET
PASSENGER TARGET MARKET
 
Building fare Calculation_PPT_BY FADIL
Building fare Calculation_PPT_BY FADILBuilding fare Calculation_PPT_BY FADIL
Building fare Calculation_PPT_BY FADIL
 

Viewers also liked

Introduction to airline networks
Introduction to airline networksIntroduction to airline networks
Introduction to airline networksPrateek Garodia
 
Revenue passenger mile & Yield
Revenue passenger mile & YieldRevenue passenger mile & Yield
Revenue passenger mile & YieldPrateek Garodia
 
Aircraft Air Conditioning And Pressurisation System
Aircraft Air Conditioning And Pressurisation SystemAircraft Air Conditioning And Pressurisation System
Aircraft Air Conditioning And Pressurisation SystemCahit Kutay Uysal
 
Chapter 13: Revenue Management
Chapter 13: Revenue ManagementChapter 13: Revenue Management
Chapter 13: Revenue ManagementNicole Hay-Walters
 

Viewers also liked (7)

Airline Economics
Airline EconomicsAirline Economics
Airline Economics
 
Passenger load factor
Passenger load factorPassenger load factor
Passenger load factor
 
Introduction to airline networks
Introduction to airline networksIntroduction to airline networks
Introduction to airline networks
 
Revenue passenger mile & Yield
Revenue passenger mile & YieldRevenue passenger mile & Yield
Revenue passenger mile & Yield
 
Aircraft Air Conditioning And Pressurisation System
Aircraft Air Conditioning And Pressurisation SystemAircraft Air Conditioning And Pressurisation System
Aircraft Air Conditioning And Pressurisation System
 
Yield management
Yield managementYield management
Yield management
 
Chapter 13: Revenue Management
Chapter 13: Revenue ManagementChapter 13: Revenue Management
Chapter 13: Revenue Management
 

Similar to Yield management in the airline industry

Overbooking policy revenue management1
Overbooking policy  revenue management1Overbooking policy  revenue management1
Overbooking policy revenue management1Mohammed Awad
 
Airline revenue management
Airline revenue managementAirline revenue management
Airline revenue managementZahide Bakar
 
IATA areas traffic Conferences.pptx
IATA areas traffic Conferences.pptxIATA areas traffic Conferences.pptx
IATA areas traffic Conferences.pptxAmitGayatriSingh1
 
Southwest Airlines | HBR Case
Southwest Airlines | HBR Case Southwest Airlines | HBR Case
Southwest Airlines | HBR Case Skull Matrix
 
Southwest History and GrowthCorporate Level Strategy.docx
Southwest History and GrowthCorporate Level Strategy.docxSouthwest History and GrowthCorporate Level Strategy.docx
Southwest History and GrowthCorporate Level Strategy.docxrafbolet0
 
Marketing Airline
Marketing AirlineMarketing Airline
Marketing Airlinezeeshanvali
 
Amin deroui - profitable hotel rate management
Amin deroui -  profitable hotel rate managementAmin deroui -  profitable hotel rate management
Amin deroui - profitable hotel rate managementAminDeroui1
 
Profiting from uncertainty
Profiting from uncertaintyProfiting from uncertainty
Profiting from uncertaintyTom Bacon
 
Customer Experience Management - Whitepaper
Customer Experience Management - WhitepaperCustomer Experience Management - Whitepaper
Customer Experience Management - WhitepaperNIIT Technologies
 
Performance comparison of southwest airlines with us aviation industry
Performance comparison of southwest airlines with us aviation industryPerformance comparison of southwest airlines with us aviation industry
Performance comparison of southwest airlines with us aviation industryMonk consulting
 
AIR Newsletter 1 march 2017 final
AIR Newsletter 1 march 2017 final AIR Newsletter 1 march 2017 final
AIR Newsletter 1 march 2017 final Dr Tony Webber
 
Airline Operational Efficiency
Airline Operational EfficiencyAirline Operational Efficiency
Airline Operational EfficiencyApril Knyff
 
(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje
(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje
(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various objeMoseStaton39
 
AIRCRAFT OWNERSHIP.pptx
AIRCRAFT OWNERSHIP.pptxAIRCRAFT OWNERSHIP.pptx
AIRCRAFT OWNERSHIP.pptxMiltonHuggins2
 

Similar to Yield management in the airline industry (20)

Overbooking policy revenue management1
Overbooking policy  revenue management1Overbooking policy  revenue management1
Overbooking policy revenue management1
 
Core product
Core productCore product
Core product
 
Airline revenue management
Airline revenue managementAirline revenue management
Airline revenue management
 
IATA areas traffic Conferences.pptx
IATA areas traffic Conferences.pptxIATA areas traffic Conferences.pptx
IATA areas traffic Conferences.pptx
 
Southwest Airlines | HBR Case
Southwest Airlines | HBR Case Southwest Airlines | HBR Case
Southwest Airlines | HBR Case
 
Southwest History and GrowthCorporate Level Strategy.docx
Southwest History and GrowthCorporate Level Strategy.docxSouthwest History and GrowthCorporate Level Strategy.docx
Southwest History and GrowthCorporate Level Strategy.docx
 
Group 4.pptx
Group 4.pptxGroup 4.pptx
Group 4.pptx
 
Marketing Airline
Marketing AirlineMarketing Airline
Marketing Airline
 
Amin deroui - profitable hotel rate management
Amin deroui -  profitable hotel rate managementAmin deroui -  profitable hotel rate management
Amin deroui - profitable hotel rate management
 
Profiting from uncertainty
Profiting from uncertaintyProfiting from uncertainty
Profiting from uncertainty
 
south east
south eastsouth east
south east
 
Customer Experience Management - Whitepaper
Customer Experience Management - WhitepaperCustomer Experience Management - Whitepaper
Customer Experience Management - Whitepaper
 
Performance comparison of southwest airlines with us aviation industry
Performance comparison of southwest airlines with us aviation industryPerformance comparison of southwest airlines with us aviation industry
Performance comparison of southwest airlines with us aviation industry
 
Porter's Analysis
Porter's AnalysisPorter's Analysis
Porter's Analysis
 
Jet blue airways
Jet blue airwaysJet blue airways
Jet blue airways
 
AIR Newsletter 1 march 2017 final
AIR Newsletter 1 march 2017 final AIR Newsletter 1 march 2017 final
AIR Newsletter 1 march 2017 final
 
Airline Operational Efficiency
Airline Operational EfficiencyAirline Operational Efficiency
Airline Operational Efficiency
 
The revenue trinity for airlines
The revenue trinity for airlinesThe revenue trinity for airlines
The revenue trinity for airlines
 
(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje
(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje
(Chelsey)Das Bett, Katharina Grosse, 2004, Acrylic on various obje
 
AIRCRAFT OWNERSHIP.pptx
AIRCRAFT OWNERSHIP.pptxAIRCRAFT OWNERSHIP.pptx
AIRCRAFT OWNERSHIP.pptx
 

More from TTS

Tips for travel agents to boost sales
Tips for travel agents to boost salesTips for travel agents to boost sales
Tips for travel agents to boost salesTTS
 
Improve customer service to empower your clients
Improve customer service to empower your clientsImprove customer service to empower your clients
Improve customer service to empower your clientsTTS
 
Why business travelers still prefer travel agents
Why business travelers still prefer travel agentsWhy business travelers still prefer travel agents
Why business travelers still prefer travel agentsTTS
 
Why Millennials are the most likely to hire a travel agent
Why Millennials are the most likely to hire a travel agentWhy Millennials are the most likely to hire a travel agent
Why Millennials are the most likely to hire a travel agentTTS
 
Why And How Travel Agents Should Use Social Media
Why And How Travel Agents Should Use Social MediaWhy And How Travel Agents Should Use Social Media
Why And How Travel Agents Should Use Social MediaTTS
 
TTS 2014 - Year in Review
TTS 2014 - Year in ReviewTTS 2014 - Year in Review
TTS 2014 - Year in ReviewTTS
 
Technology Trends Shaping Africa
Technology Trends Shaping AfricaTechnology Trends Shaping Africa
Technology Trends Shaping AfricaTTS
 
Technology in the Travel Industry - Insights
Technology in the Travel Industry - InsightsTechnology in the Travel Industry - Insights
Technology in the Travel Industry - InsightsTTS
 
Travelport Mobile Agent - The story behind one great app for travel agents
Travelport Mobile Agent - The story behind one great app for travel agentsTravelport Mobile Agent - The story behind one great app for travel agents
Travelport Mobile Agent - The story behind one great app for travel agentsTTS
 
TTS' Global Presence
TTS' Global PresenceTTS' Global Presence
TTS' Global PresenceTTS
 
What is NDC?
What is NDC?What is NDC?
What is NDC?TTS
 
The evolution of GDS ( Global Distribution System)
The evolution of GDS ( Global Distribution System)The evolution of GDS ( Global Distribution System)
The evolution of GDS ( Global Distribution System)TTS
 

More from TTS (12)

Tips for travel agents to boost sales
Tips for travel agents to boost salesTips for travel agents to boost sales
Tips for travel agents to boost sales
 
Improve customer service to empower your clients
Improve customer service to empower your clientsImprove customer service to empower your clients
Improve customer service to empower your clients
 
Why business travelers still prefer travel agents
Why business travelers still prefer travel agentsWhy business travelers still prefer travel agents
Why business travelers still prefer travel agents
 
Why Millennials are the most likely to hire a travel agent
Why Millennials are the most likely to hire a travel agentWhy Millennials are the most likely to hire a travel agent
Why Millennials are the most likely to hire a travel agent
 
Why And How Travel Agents Should Use Social Media
Why And How Travel Agents Should Use Social MediaWhy And How Travel Agents Should Use Social Media
Why And How Travel Agents Should Use Social Media
 
TTS 2014 - Year in Review
TTS 2014 - Year in ReviewTTS 2014 - Year in Review
TTS 2014 - Year in Review
 
Technology Trends Shaping Africa
Technology Trends Shaping AfricaTechnology Trends Shaping Africa
Technology Trends Shaping Africa
 
Technology in the Travel Industry - Insights
Technology in the Travel Industry - InsightsTechnology in the Travel Industry - Insights
Technology in the Travel Industry - Insights
 
Travelport Mobile Agent - The story behind one great app for travel agents
Travelport Mobile Agent - The story behind one great app for travel agentsTravelport Mobile Agent - The story behind one great app for travel agents
Travelport Mobile Agent - The story behind one great app for travel agents
 
TTS' Global Presence
TTS' Global PresenceTTS' Global Presence
TTS' Global Presence
 
What is NDC?
What is NDC?What is NDC?
What is NDC?
 
The evolution of GDS ( Global Distribution System)
The evolution of GDS ( Global Distribution System)The evolution of GDS ( Global Distribution System)
The evolution of GDS ( Global Distribution System)
 

Recently uploaded

Revolutionalizing Travel: A VacAI Update
Revolutionalizing Travel: A VacAI UpdateRevolutionalizing Travel: A VacAI Update
Revolutionalizing Travel: A VacAI Updatejoymorrison10
 
What Are The Must-Know Tips For First-Time Jet Skiers In Aruba
What Are The Must-Know Tips For First-Time Jet Skiers In ArubaWhat Are The Must-Know Tips For First-Time Jet Skiers In Aruba
What Are The Must-Know Tips For First-Time Jet Skiers In ArubaDelphi Watersports
 
Story Of Neem Karoli Baba -Kainchi Dham Yatra
Story Of Neem Karoli Baba -Kainchi Dham YatraStory Of Neem Karoli Baba -Kainchi Dham Yatra
Story Of Neem Karoli Baba -Kainchi Dham YatraSuYatra
 
Canada PR - Eligibility, Steps to apply and Visa processing fees
Canada PR - Eligibility, Steps to apply and Visa processing feesCanada PR - Eligibility, Steps to apply and Visa processing fees
Canada PR - Eligibility, Steps to apply and Visa processing feesY-Axis Overseas Careers
 
What Safety Precautions Are Recommended For Na Pali Snorkeling Adventure
What Safety Precautions Are Recommended For Na Pali Snorkeling AdventureWhat Safety Precautions Are Recommended For Na Pali Snorkeling Adventure
What Safety Precautions Are Recommended For Na Pali Snorkeling AdventureHanalei Charters
 
a presentation for foreigners about how to travel in Germany.
a presentation for foreigners about how to travel in Germany.a presentation for foreigners about how to travel in Germany.
a presentation for foreigners about how to travel in Germany.moritzmieg
 
The Roles of Aviation Auditors - Presentation
The Roles of Aviation Auditors - PresentationThe Roles of Aviation Auditors - Presentation
The Roles of Aviation Auditors - PresentationTilak Ramaprakash
 
How Safe Is It To Witness Whales In Maui’s Waters
How Safe Is It To Witness Whales In Maui’s WatersHow Safe Is It To Witness Whales In Maui’s Waters
How Safe Is It To Witness Whales In Maui’s WatersMakena Coast Charters
 
Sicily Holidays Guide Book: Unveiling the Treasures of Italy's Jewel
Sicily Holidays Guide Book: Unveiling the Treasures of Italy's JewelSicily Holidays Guide Book: Unveiling the Treasures of Italy's Jewel
Sicily Holidays Guide Book: Unveiling the Treasures of Italy's JewelTime for Sicily
 
Disney Dreams in Europe: A Guide to Disneyland Paris
Disney Dreams in Europe: A Guide to Disneyland ParisDisney Dreams in Europe: A Guide to Disneyland Paris
Disney Dreams in Europe: A Guide to Disneyland ParisisangoTravel
 
Transportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdf
Transportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdfTransportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdf
Transportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdfGlobalbustours
 
69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)
69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)
69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)Escort Service
 
5 beautyfull places visiting in uttrakhand
5 beautyfull places visiting in uttrakhand5 beautyfull places visiting in uttrakhand
5 beautyfull places visiting in uttrakhandaradhya3287
 
5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)
5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)
5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)Mazie Garcia
 
Top Five Best Places to Visit in India.pdf
Top Five Best Places to Visit in India.pdfTop Five Best Places to Visit in India.pdf
Top Five Best Places to Visit in India.pdfonlinevisaindia
 
Authentic Travel Experience 2024 Greg DeShields.pptx
Authentic Travel Experience 2024 Greg DeShields.pptxAuthentic Travel Experience 2024 Greg DeShields.pptx
Authentic Travel Experience 2024 Greg DeShields.pptxGregory DeShields
 
Paragliding Billing Bir at Himachal Pardesh
Paragliding Billing Bir at Himachal PardeshParagliding Billing Bir at Himachal Pardesh
Paragliding Billing Bir at Himachal PardeshParagliding Billing Bir
 
What Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To Grasp
What Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To GraspWhat Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To Grasp
What Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To GraspHanalei Surf School
 
It’s Time Get Refresh Travel Around The World
It’s Time Get Refresh Travel Around The WorldIt’s Time Get Refresh Travel Around The World
It’s Time Get Refresh Travel Around The WorldParagliding Billing Bir
 
Lucknow to Sitapur Cab | Lucknow to Sitapur Taxi
Lucknow to Sitapur Cab | Lucknow to Sitapur TaxiLucknow to Sitapur Cab | Lucknow to Sitapur Taxi
Lucknow to Sitapur Cab | Lucknow to Sitapur TaxiCab Bazar
 

Recently uploaded (20)

Revolutionalizing Travel: A VacAI Update
Revolutionalizing Travel: A VacAI UpdateRevolutionalizing Travel: A VacAI Update
Revolutionalizing Travel: A VacAI Update
 
What Are The Must-Know Tips For First-Time Jet Skiers In Aruba
What Are The Must-Know Tips For First-Time Jet Skiers In ArubaWhat Are The Must-Know Tips For First-Time Jet Skiers In Aruba
What Are The Must-Know Tips For First-Time Jet Skiers In Aruba
 
Story Of Neem Karoli Baba -Kainchi Dham Yatra
Story Of Neem Karoli Baba -Kainchi Dham YatraStory Of Neem Karoli Baba -Kainchi Dham Yatra
Story Of Neem Karoli Baba -Kainchi Dham Yatra
 
Canada PR - Eligibility, Steps to apply and Visa processing fees
Canada PR - Eligibility, Steps to apply and Visa processing feesCanada PR - Eligibility, Steps to apply and Visa processing fees
Canada PR - Eligibility, Steps to apply and Visa processing fees
 
What Safety Precautions Are Recommended For Na Pali Snorkeling Adventure
What Safety Precautions Are Recommended For Na Pali Snorkeling AdventureWhat Safety Precautions Are Recommended For Na Pali Snorkeling Adventure
What Safety Precautions Are Recommended For Na Pali Snorkeling Adventure
 
a presentation for foreigners about how to travel in Germany.
a presentation for foreigners about how to travel in Germany.a presentation for foreigners about how to travel in Germany.
a presentation for foreigners about how to travel in Germany.
 
The Roles of Aviation Auditors - Presentation
The Roles of Aviation Auditors - PresentationThe Roles of Aviation Auditors - Presentation
The Roles of Aviation Auditors - Presentation
 
How Safe Is It To Witness Whales In Maui’s Waters
How Safe Is It To Witness Whales In Maui’s WatersHow Safe Is It To Witness Whales In Maui’s Waters
How Safe Is It To Witness Whales In Maui’s Waters
 
Sicily Holidays Guide Book: Unveiling the Treasures of Italy's Jewel
Sicily Holidays Guide Book: Unveiling the Treasures of Italy's JewelSicily Holidays Guide Book: Unveiling the Treasures of Italy's Jewel
Sicily Holidays Guide Book: Unveiling the Treasures of Italy's Jewel
 
Disney Dreams in Europe: A Guide to Disneyland Paris
Disney Dreams in Europe: A Guide to Disneyland ParisDisney Dreams in Europe: A Guide to Disneyland Paris
Disney Dreams in Europe: A Guide to Disneyland Paris
 
Transportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdf
Transportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdfTransportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdf
Transportation Options_ Getting to Keukenhof Gardens from Amsterdam.pdf
 
69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)
69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)
69 Girls ✠ 9599264170 ✠ Call Girls In East Of Kailash (VIP)
 
5 beautyfull places visiting in uttrakhand
5 beautyfull places visiting in uttrakhand5 beautyfull places visiting in uttrakhand
5 beautyfull places visiting in uttrakhand
 
5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)
5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)
5S - House keeping (Seiri, Seiton, Seiso, Seiketsu, Shitsuke)
 
Top Five Best Places to Visit in India.pdf
Top Five Best Places to Visit in India.pdfTop Five Best Places to Visit in India.pdf
Top Five Best Places to Visit in India.pdf
 
Authentic Travel Experience 2024 Greg DeShields.pptx
Authentic Travel Experience 2024 Greg DeShields.pptxAuthentic Travel Experience 2024 Greg DeShields.pptx
Authentic Travel Experience 2024 Greg DeShields.pptx
 
Paragliding Billing Bir at Himachal Pardesh
Paragliding Billing Bir at Himachal PardeshParagliding Billing Bir at Himachal Pardesh
Paragliding Billing Bir at Himachal Pardesh
 
What Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To Grasp
What Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To GraspWhat Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To Grasp
What Unwritten Rules Of Surfing Etiquette Are Crucial For Beginners To Grasp
 
It’s Time Get Refresh Travel Around The World
It’s Time Get Refresh Travel Around The WorldIt’s Time Get Refresh Travel Around The World
It’s Time Get Refresh Travel Around The World
 
Lucknow to Sitapur Cab | Lucknow to Sitapur Taxi
Lucknow to Sitapur Cab | Lucknow to Sitapur TaxiLucknow to Sitapur Cab | Lucknow to Sitapur Taxi
Lucknow to Sitapur Cab | Lucknow to Sitapur Taxi
 

Yield management in the airline industry

  • 1. YIELD MANAGEMENT IN THE AIRLINE INDUSTRY
  • 2. •  Originally as an airline industry concept •  Adopted by service organizations across all spheres •  Limited research on its exact effects on business-to business relationships •  Limited knowledge about how feelings of price fairness affect loyalty YIELD MANAGEMENT BLOG.TTS.COM
  • 3. The main goal of yield management is to maximize the revenue with the help of effective management of three essential domains: •  Pricing strategy •  Control of availability: total number of empathy seats on board of the aircraft •  Inventory control: depends on the availability of resources such as aircraft, gasoline and employees DEFINITION by Wang & Bowie BLOG.TTS.COM
  • 4. •  Most airlines who began to practice the concepts of yield management saw a direct increase of 3-7% in revenue •  Success cases: American Airlines, Delta, Marriot Hotels, among others •  Also used by travel agents who used it to generate the maximum possible revenue from their holiday packages PROFITABILITY BLOG.TTS.COM
  • 5. So how does the yield management system work? BLOG.TTS.COM
  • 6. EXAMPLE BLOG.TTS.COM A flight that has two fare buckets: discount price and full price. The flight has 200 seats that are available for an early morning flight on February 16th. The flight should easily be able to sell off all seats at a discounted price, but it understands that an increasing number of customers will be willing to pay full price for seats as February 16th gets closer. To make things easier, we further assume that the leisure demand occurs before business demand. The next thing to do is to determine how many seats the airline should sell at leisure fare and how many seats should it protect for people who would pay full price. If the airline ends up protecting too many seats, it faces the risk of flying with empty seats. On the other hand, if very few seats are protected the airline might end up losing out on extra revenue that is usually generated from the business fliers.
  • 7. In order to differentiate between the two groups, the airline often introduced barriers or “fences” between the two market segments. For example, the airline might phase in the full fare seats as the flying date gets closer and phase out the discounted seats. Since holiday fliers are expected to reserve their itineraries in advance, they are more than likely to make the most of the discounted fares. On the other hand, a majority of the business trips are decided within a week or two from the date of travel. This allows the airline to collect full fares from business fliers. The same example can be used in the case of a hotel - read it here! EXAMPLE BLOG.TTS.COM
  • 8. How does it impact on customer feelings of price fairness and customer loyalty? BLOG.TTS.COM
  • 9. IMPACT BLOG.TTS.COM •  Customers consider the price to be unfair when they realize that the airline is using price strategies to generate profit •  Ends up having a negative effect on leisure travelers because business travelers are less price sensitive •  Price fairness is not a proper predictor of loyalty, there are other factors at stake
  • 10. ULTIMATELY… BLOG.TTS.COM •  Yield management works best in situations where demand exceeds supply •  It allows the industry to choose the demand it wishes to address in order to maximize the revenue •  However these systems can also be used when supply exceeds demand to phase out bookings in a manner that allows the company to achieve the best possible revenue generation, given its constraints