¹Karolin Fellner is a Product Manager for PROS Revenue Management, the world's leader in pricing revenue optimisation solutions. As a Product Manager for Airline Solutions, she is responsible for product management focusing on PROS' Network Revenue Planning System. In this position, she is responsible for product specification definition and project implementation, as well as product management leadership, client services, training, and client support. Prior to joining PROS Revenue Management, she held various positions in the financial services and energy industries. She received Bachelor of Arts degrees in Economics and English from Rice University in Houston, TX, USA.

²Royce Kallesen is a Manager in the Science and Research Department at PROS Revenue Management. Royce joined PROS in 1999. He is responsible for science management of the PROS 5 and PROS NRPS systems. Prior to joining PROS, he was a Member of the Technical Staff for Logicon Inc., now a Northrop Grumman company. During his five years at Logicon, he worked on large-scale decision support software projects, including performance planning and allocation of strategic resources. He received a BA in Mathematics and Computer Science from Augustana College in Sioux Falls, SD and an MS in Mathematics with an emphasis in Operation Research from the University of Nebraska at Omaha.

³Antonio Ruggiero is a Senior Scientist in Science and Research at PROS Revenue Management. His main duty is science support for pricing implementations. Prior to joining PROS, he was involved with a start-up mathematical finance software company, Numerica. Furthermore, he has held many research positions and sessional instructorships at various universities in the fields of Mathematics, Physics, and Mathematical Finance. He has earned an MSc in Applied Mathematics with an emphasis in Mathematical Finance (Stochastic Processes) and an MSc in Theoretical Physics.

⁴Benson Yuen is the President of the Airline Group at PROS Revenue Mangement. He joined PROS Revenue Management in 1988. His analytical and problem-solving skills have been instrumental in the successful installation and implementation of PROS systems in diverse airline environments. In addition, his practical yield management experience has contributed substantially to the design of PROS systems. He was one of the principal designers of the PROS Origin-Destination Group Revenue Optimization System, as well as other PROS system modules. During his tenure as Director of Pricing and Central Reservations Control at Florida Express Airlines, he was responsible for the airline's revenue management function, which included marketing automation software development, pricing and tariff strategies, and the direction of the central reservations control system. He has published the following papers: Point-of-Sale: An Alternative Form of O&D Control; Group Revenue Management: Redefining the Business Process, and The New Generation of Revenue Management — A Network Perspective, in the 1998 edition of The Handbook of Airline Marketing. He graduated summa cum laude from the University of Central Florida, with a Bachelor of Science degree in Business Administration.

Received 20 November 2005.

Abstract

An airline's multi-class hierarchy fulfills a number of very important functions within the organisation. It can be a powerful strategic and tactical tool when used to address business process disconnects, especially between the Revenue Management/Pricing and Sales departments. This article describes a fare stratification process to address these issues, where the intent is to refocus the multi-class hierarchy in terms of network revenue priorities. The article also includes simulation results to substantiate the merits of this process improvement, and it reveals that Multi-class Fare Rationalisation must be an integral part of any network-wide organisational strategy that incorporates the overarching mission of revenue maximisation.