Title: Airline fare product design in the context of yield management

Authors: Theodore C. Botimer

Addresses: Institute of Transportation Studies, University of California at Berkeley, Berkeley, CA 94720-1720, USA

Abstract: With the advent of computerised yield management systems, the pricing and marketing of airline services have changed. The naive view of airline pricing which considers all prices to be dictated by the market must give way to a broader perspective which identifies the synergistic functions that pricing and yield management departments serve in airline marketing. This paper demonstrates that, while the allocation of airline seats when demand exceeds supply necessarily results in passenger service denials, an effective design of the bundles of price level and purchase restrictions, or fare products, can improve airline performance by enhancing revenue and delivering a higher level of service to many of the most valued customers.

Keywords: airline revenue management; yield management; pricing; airline fare products; product differentiation; price discrimination; product design.

DOI: 10.1504/IJSTM.2000.001562

International Journal of Services Technology and Management, 2000 Vol.1 No.1, pp.100-113

Published online: 04 Jul 2003 *

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