An approach to offer management: maximizing sales with fare products and ancillaries
- 38 Downloads
With the growth in ancillary sales, an area of increasing importance for airlines is the concept of offer management, which entails the creation of dynamic, custom, personalized offers consisting of a flight itinerary and ancillary products offered by an airline. This practice-oriented, overview paper provides an end-to-end, future-oriented framework for determining the composition of optimal base fare and ancillary bundles by customer trip-purpose segment followed by 1:1 personalization to maximize total sales. Our focus in this paper is primarily on the proposed offer management framework and its sub-components.
KeywordsRevenue management Ancillary products Willingness-to-pay Bundles Customer segmentation Personalization Controlled experiments
- Alexander, K.L. 2006. Paying more for small extras. Washington Post, January 31. http://www.washingtonpost.com/wp-dyn/content/article/2006/01/30/AR2006013001282.html.
- Ben-Akiva, M., and S. Lerman. 1985. Discrete choice analysis: Theory and application to travel demand. Cambridge, MA: MIT Press.Google Scholar
- Choubert, L., T. Fiig, and V. Viale. 2015. “Amadeus Dynamic Pricing”, presentation at the AGIFORS Revenue Management and Distribution Study Group meeting, Shanghai, China.Google Scholar
- Hague, N. 2008. The problem with price. B2B International. http://www.b2binternational.com/library/whitepapers/pdf/the_problem_with_price.pdf.
- Hair, J.S., R.E. Anderson, and R.T. Tatham. 1984. Multivariate data analysis with readings, 2nd ed. New York: Macmillan.Google Scholar
- IdeaWorks. 2016. Airline ancillary revenue projected to be $67.4 billion worldwide in 2016. Press release, 29 Nov. 29, 2016. No. 115. http://www.ideaworkscompany.com/wp-content/uploads/2016/11/Press-Release-115-Global-Estimate.pdf.
- Ratliff, R.M., A. Walker, B.C. Smith, and T. Brice. 2003. Availability based value creation method and systems, U.S. Patent 20030191725, filed March 26, 2003, and issued October 9, 2003.Google Scholar
- Ratliff, R.M. 2016. A business overview of market adaptive dynamic pricing. Sabre white paper.Google Scholar
- Rickey, D. 2014. Total revenue management. Ascend 13 (4): 20–22.Google Scholar
- van Westendorp, P.H. 1976. NSS—price sensitivity meter (PSM)—a new approach to study consumer perception of price. Proceedings of the ESOMAR Congress, Venice.Google Scholar