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Uploaded byNarudh Cheramakara
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Airline Marketing 7. pricing and revenue management

This document discusses airline pricing and revenue management. It covers the development of airline fares from regulated prices set by IATA to deregulation and fare wars. Airlines now use revenue management techniques to set demand-based prices and optimize profits by selling the same product at different prices. This allows charging higher prices to customers who are willing to pay more, such as last-minute travelers. The document also examines metrics like cabin factor, average fare, and revenue per seat kilometer used in revenue analysis, as well as price discrimination methods like minimum stay conditions used to prevent high spenders from accessing lower fares.

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Airline Marketing 7: Pricing and Revenue Management Dr Narudh Cheramakara Bangkok University 1/2017
1. The Development of Airline Fare: Price  part of marketing mix • IATA Control Fares • Single fare • Deregulation  Fare war • Airlines, particularly short-haul, are seen as homogenous products. • Effectively like taxi; green, pink, yellow but they are essentially the same • The curse of airline competition: Airlines tend to reduce the fare to ‘kill off’ competition. However, once the competitor exits the market, new entry is abound • Revenue Management
2. Revenue Management • Effectively selling the same product at different prices. • To optimize revenues • Demand-based pricing – Inflexible demand, higher willingness to pay (This is why buying ticket at the airport is more expensive) • Think about Bangkok-Chang Mai price: Songkran v Wednesday Afternoon • Aid by computer software. • The implication is that high-load factor on some flights doesn’t translate into profits.
2. Revenue Management
2. Revenue Management • A
Revenue Analysis Cabin factor Average Fare RSK = Revenue per Seat Kilometer CSK = Cost per Seat Kilometer
Price Discrimination • Preventing High spenders from using lower fares 1. Minimum Stay condition - Bangkok Airways REP case 2. Maximum Stay - Longer the stay, the more expensive (7 days, 14 days, 1 – 3 -6- 12 months) 3. Advance Purchase - This some times is not applicable for Thai LCC market 4. Saturday night stay rule - Outdated but still exists in some cases 5. Flexibility Conditions
Airline Marketing 7. pricing and revenue management