Correspondence: Steve Fletcher, SH&E, 210 High Holborn, London WC1V 7EU, UK. E-mail: sfletcher@sh-e.com

¹is a Vice President with SH&E. He holds a BS and MS from MIT in Civil Engineering with a specialisation in Transportation System Analysis. He has a background in Operations Research and Information Systems development. He is responsible for SH&E's Aviation Decision Solutions Group providing comprehensive software solutions for key airline commercial decisions, most notably in the areas of scheduling, pricing and revenue management. Before joining SH&E, Mr Michaels was involved in the surface freight industry and worked on the development of rail capacity/service models used in regulatory proceedings.

²is a Principal with SH&E. He has an MA in OR from Lancaster University and a BA in Mathematics from Oxford University. He provides advice and training in the areas of revenue management, pricing, commercial systems, distribution, product development and business planning to airlines worldwide. He previously held a variety of senior roles at British Airways, including responsibility for BA's yield management and revenue forecasting functions. Earlier he was responsible for IT and Operational Research, covering a/c and crew scheduling, flight planning, ops control and airports.

Received 1 June 2008; Revised 1 June 2008; Published online 3 April 2009.

Abstract

The way in which low cost carriers price their product and revenue manage their flights has posed a commercial challenge to their traditional competitors, and also questions the validity of the conventional airline revenue management theory and practice. This paper examines how they differ in their approach, how airlines are responding and what constitutes an effective response in the changed airline business world. This includes consideration of all the marketing levers (product, price, promotion and distribution) in an integrated way, as well as developments needed in the core revenue management systems themselves.