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Synergizing RM science and airline distribution technologies: A pricing example

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Abstract

Distribution (‘Distribution’ is used to represent both inventory and fare distribution technologies) and revenue management (RM) are two very crucial functions of the airline industry. Although RM has evolved significantly over the past many years, distribution has not evolved as much. Major improvements to distribution are expected to take several years. RM is heavily dependent on data provided by distribution technologies. The lag in sophistication of data compared with RM science could be limiting the effectiveness of RM science. Small improvements to data may be more gainful than similar improvements to science. This article uses a hypothetical pricing example to explain the same; using the current distribution and RM framework but by developing an auto fare filing engine, several key data inputs into RM algorithms could be improved significantly. The article proposes simulation tests for cost-benefit analysis and urges the industry to explore similar concepts.

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Notes

  1. Fare Classes and RBDs are used interchangeably.

  2. It could be possible to dynamically alter evaluation fares using more advanced systems such as PROS RTDP, Amadeus RAAV, to further reduce the false open–close cases. The discussion is deliberately avoided to stay within the scope of the article.

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Authors and Affiliations

  1. Revenue Management, Qatar Airways, Qatar Airways Tower 2, Doha, Qatar

    Praveen Kumar Bala

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  1. Praveen Kumar Bala
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Correspondence to Praveen Kumar Bala.

Additional information

Correction

A proofing correction was not included in the HTML version of this article, originally published 27 June 2014. This correction has now been made in this final version.

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Bala, P. Synergizing RM science and airline distribution technologies: A pricing example. J Revenue Pricing Manag 13, 402–410 (2014). https://doi.org/10.1057/rpm.2014.21

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  • DOI: https://doi.org/10.1057/rpm.2014.21

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