Paper

Journal of Revenue & Pricing Management (2004) 3, 171–177; doi:10.1057/palgrave.rpm.5170104

Practice Papers: The science of revenue management when passengers purchase the lowest available fare

E Andrew Boyd1 and Royce Kallesen2

  1. 1is Chief Scientist and Senior Vice President of Science and Research at PROS Revenue Management, www.prosrm.com. He received his PhD in operations research from MIT in 1987
  2. 2is the Senior Scientist in charge of airline product science at PROS Revenue Management, and can be reached at rkallesen@prosrm.com

Correspondence: E Andrew Boyd, PROS Revenue Management, 3100 Main Street, Suite 900, Houston, TX 77002, USA Tel: +1 713 335 5151; E-mail: aboyd@prosrm.com

Received 6 April 2004.

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Abstract

The changing business environment is making ticket price an ever more important consideration in passenger purchasing behaviour. This paper discusses how traditional revenue management models change as the ability to segment passengers deteriorates and passengers focus on price. The concepts are applicable to most industries where revenue management is practised.

Keywords:

revenue management, yield management, low-fare carriers, low-cost carriers, yieldable demand, priceable demand, airline demand models