Airline Revenue Management

by

ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University

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ABSTRACT

Revenue Management deals with managing demand and supply by the decision making process about selling method, pricing and quantity (how to allocate Capacity, accept or deny decisions. It is a practice of maximizing revenue by selling the right seats to the right customers at the right price .It is also known as the process of allocating the right capacity or inventory unit to the right customer at the right price so as to maximize revenue or yield. The whole dissertation has been divided into 6 chapters. Chapter 1 provides an introduction and background of the study. Chapter 2 provides a review of the literature. Chapter 3 provides the methodology used to generate results for this study. Chapter 4 provides the discussion of the study. Chapter 5 presents a case study analysis on the Kuwait Airways and finally, Chapter 6 presents the conclusion for this study.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the study1

Aim of the research1

Significance of the Research1

Research Questions2

CHAPTER 2: LITERATURE REVIEW3

Introduction3

Revenue Management Definition3

Historical Background3

Practices Of RM In Different Industries4

The Core Concepts of Revenue Management5

Common Characteristics of Revenue Management5

Perishable Inventory5

Fixed capacity or high cost of incremental capacity6

Market segmentation6

The Revenue Management Attitude6

Quantity Vs Price Based RM6

Network Capacity Control7

Overbooking8

Airline Revenue Management and Booking Process9

Dynamic Pricing10

Auctions10

Effect of Socio-Economic and Technological Changes on Air Travel Demand11

Demand Elasticity11

BPR (Behavior Pattern recognition)13

Traveler's Perception and Body Comfort14

CHAPTER 3: METHODOLOGY16

Research Design17

Qualitative Research18

Differences between Qualitative and Quantitative Research18

Advantages and Disadvantages19

Secondary Data19

Literature Search19

Confidentiality20

Reliability20

Research Validity20

Limitations of Research20

Ethical Considerations21

CHAPTER 4: DISCUSSION22

Airlines22

Airline Industry22

Airline Corporate Structure22

Airline RM Organization22

Airline Booking Process22

Revenue-based booking control method (bid price Control)23

Class-Based Booking Control Methods23

Partitioned And Nested Allocation Of Seats On A Single Leg24

Partitioned And Nested Allocation On A Network Of Flights24

Revenue Management on Airline Booking Process and Maintenance Centre Management25

CHAPTER 5: CASE STUDY ANALYSIS OF KUWAIT AIRWAYS27

Aircraft Maintenance Order Control through Revenue Management: A Peak Load Pricing Strategy27

Peak Load Pricing in Kuwait Airways27

Kuwait Airways and Aircraft Maintenance Industry27

Bookings In Kuwait Airways And In Aircraft Maintenance Centres28

Peak Load Pricing in Kuwait Airways30

CHAPTER 6: CONCLUSION31

Contributions in Airline RM Model with Options Approach31

Contributions in Aircraft Maintenance Order Control through RM31

Future Research on Aircraft Maintenance32

REFERENCES33

CHAPTER 1: INTRODUCTION

Background of the study

After deregulation of the airline industry in the 1970s, airlines were able to set their own prices. They could also sell seats of the same cabin for different prices. That was an early stage for revenue management (RM). This area has evolved considerably since then. It has also expanded into businesses other than the airline industry like the hotel and cruise industries, though the main application is still in the airline ...