Author: Adam Bockelie Publisher: ISBN: Category : Languages : en Pages : 282
Book Description
The recent proliferation of ancillary services means that airline passengers can face substantially different ancillary service prices and offerings based on their itinerary and fare class selection. At the same time, airlines have become interested in accounting for this supplementary revenue stream in their revenue management (RM) systems to maximize total, not just ticket, revenue. This thesis develops models for both of these issues, with a goal of providing a better understanding of how ancillary services affect the airline industry. We develop the Ancillary Choice Model (ACM) to describe how passengers make purchase decisions about ancillary services in conjunction with the selection of a fare class. We model two extremes of passenger knowledge and awareness of ancillary services, which we term simultaneous and sequential. We show that under the simultaneous model, the presence and price of ancillary services can affect the fare class selection of a passenger, even when all fare classes have the same ancillary prices. The second part of this thesis studies total revenue optimization. We provide a detailed assessment of a prior total revenue maximization approach, the Optimizer Increment (01), proving that it can be an optimal revenue management strategy under limited conditions, but also showing through the Passenger Origin-Destination Simulator (PODS) that it decreases revenue in more realistic environments. We then develop a new revenue management optimization model, the Ancillary Choice Dynamic Program (ACDP), which maximizes total revenue by explicitly including the revenue and fare class choice impacts of ancillary services. We describe an Ancillary Marginal Demand (AMD) and Ancillary Marginal Revenue (AMR) transformation that can be used as heuristics to provide the ancillary and choice awareness benefits of ACDP to existing RM optimization models.
Author: Yuxuan Lu (S.M.) Publisher: ISBN: Category : Languages : en Pages : 156
Book Description
Ancillary services have been contributing increasing amounts to airlines' total revenue. Over the past decade, the number of ancillary services offered by airlines has proliferated, the quality has improved, and they have provided benefits for both carriers and passengers. Nevertheless, the pricing of the services, and particularly the interactions between the pricing of ancillary services and the airline ticket, has not been examined in competitive networks with varying passenger behavior assumptions. This thesis presents simulation tests quantifying the effects of ancillary revenues on airlines' total revenue and other performance metrics. We first introduce the history of airline ancillary services, explain the current airline revenue management process and fare structure upon which ancillary purchases are based, and summarize past literature on airline revenue management systems and airline ancillary services. We then qualitatively explain current passenger ancillary purchase behavior models, including sequential and simultaneous choice behaviors, and the impacts of the assumed behaviors on airline ticket selections and ancillary purchases. We then test the impacts of ancillary service pricing under the assumptions of our simulation environment, the Passenger Origin-Destination Simulator. We test ancillary services under different scenarios, including charging passengers differently (ancillary price segmentation) and providing services differently to passengers (ancillary disutility differentiation) for different trip purposes. The results show that the pricing of ancillary services can be leveraged by an airline as a pricing tool; when an airline discounts an ancillary service, it can gain revenue at the expense of other airlines. In our tests, when an airline discounts ancillary services for leisure passengers but charges a premium to business passengers, it observes a 3.45% total revenue gain mostly from increased leisure passengers' ticket revenues. The benefits of this asymmetric pricing could be lost when other airlines match this discounted price. Furthermore, the results also indicate that symmetric optimization of ancillary service pricing by all airlines in the market can lead to industry gains as high as 1.47% in terms of total revenue. With some ancillary pricing structures, the introduction of ancillary services encourages passengers to pay more for the ticket. The opposite scenarios are also observed in some cases when the introduction of a service leads to a reduction in ticket revenue.
Author: Ben Vinod Publisher: Springer Nature ISBN: 3030704246 Category : Business & Economics Languages : en Pages : 417
Book Description
This book chronicles airline revenue management from its early origins to the last frontier. Since its inception revenue management has now become an integral part of the airline business process for competitive advantage. The field has progressed from inventory control of the base fare, to managing bundles of base fare and air ancillaries, to the precise inventory control at the individual seat level. The author provides an end-to-end view of pricing and revenue management in the airline industry covering airline pricing, advances in revenue management, availability, and air shopping, offer management and product distribution, agency revenue management, impact of revenue management across airline planning and operations, and emerging technologies is travel. The target audience of this book is practitioners who want to understand the basics and have an end-to-end view of revenue management.
Author: Alessandro Cento Publisher: Springer Science & Business Media ISBN: 3790820881 Category : Business & Economics Languages : en Pages : 189
Book Description
The debate on the future of the aviation sector and the viability of its traditional business practices is the core of this book. The liberalization of the EU market in the 1990s has radically modi?ed the competitive environment and the nature of airline competition. Furthermore, the new millennium began with terrorist attacks, epidemics, trade globalization, and the rise of oil prices, all of which combined to push the industry into a “perfect storm”. Airline industry pro?tability has been an elusive goal for several decades and the recent events has only accentuated existing weaknesses. The main concern of ind- try observers is whether the airline business model, successful during the 1980s and 1990s, is now sustainable in a market crowded by low-cost carriers. The airlines that will respond rapidly and determinedly to increase pressure to restructure, conso- date and segment the industry will achieve competitive advantages. In this context, the present study aims to model the new conduct of the ‘legacy’ carriers in a new liberalized European market in terms of network and pricing competition with l- cost carriers and competitive reaction to the global economic crises.
Author: John F. O'Connell Publisher: Routledge ISBN: 1351959891 Category : Business & Economics Languages : en Pages : 341
Book Description
Airlines are buffeted by fluctuating political and economic landscapes, ever-changing competition, technology developments, globalization, increasing deregulation and evolving customer requirements. As a consequence all sectors of the air transport industry are in a constant state of flux. The principle aim of this book is to review current trends in the airline industry and its related suppliers, thereby providing an insight into the forces that are changing its dynamics. The factors that are reshaping the structure of the industry are examined with a view to identifying the key issues whose impact will be critical in the future. The book features two very distinct sections. The first contains short contributions from industry executives at CEO/VP level from airlines, aircraft/engine manufacturers, safety and navigational provider organisations, who have set out their take of where the airline industry is heading. This commercial input sets the scene for the book and provides the bridge to the second section, which is composed of 18 chapters written by distinguished academic authors. Each chapter presents a valuable insight into a specific area of the air transport industry, including: airlines, airports, cargo, deregulation, the environment, navigation, strategy, information technology, security and tourism. The shared objective of the authors is to describe and explain the core competencies that are determining the current shape of the industry and to examine the forces that will change its direction going forward. The book is written in a management style and will appeal to all levels of personnel who work for airlines across the world. It is also written for airport authorities, aerospace manufacturers, regulatory and government transportation agencies, researchers and students of aviation management, transport studies, tourism and the wider air transport industry.
Author: Dr George Williams Publisher: Ashgate Publishing, Ltd. ISBN: 1409486737 Category : Business & Economics Languages : en Pages : 508
Book Description
Airlines are buffeted by fluctuating political and economic landscapes, ever-changing competition, technology developments, globalization, increasing deregulation and evolving customer requirements. As a consequence all sectors of the air transport industry are in a constant state of flux. The principle aim of this book is to review current trends in the airline industry and its related suppliers, thereby providing an insight into the forces that are changing its dynamics. The factors that are reshaping the structure of the industry are examined with a view to identifying the key issues whose impact will be critical in the future. The book features two very distinct sections. The first contains short contributions from industry executives at CEO/VP level from airlines, aircraft/engine manufacturers, safety and navigational provider organisations, who have set out their take of where the airline industry is heading. This commercial input sets the scene for the book and provides the bridge to the second section, which is composed of 18 chapters written by distinguished academic authors. Each chapter presents a valuable insight into a specific area of the air transport industry, including: airlines, airports, cargo, deregulation, the environment, navigation, strategy, information technology, security and tourism. The shared objective of the authors is to describe and explain the core competencies that are determining the current shape of the industry and to examine the forces that will change its direction going forward. The book is written in a management style and will appeal to all levels of personnel who work for airlines across the world. It is also written for airport authorities, aerospace manufacturers, regulatory and government transportation agencies, researchers and students of aviation management, transport studies, tourism and the wider air transport industry.
Author: Eric C. Hao Publisher: ISBN: Category : Languages : en Pages : 110
Book Description
Airlines have increasingly depended on ancillary revenue in response to rising fuel costs, de- creased yields, and an increasingly competitive environment. Estimates indicate that U.S. airlines collected over $8 billion in ancillary revenue in 2012. Ancillary revenue poses challenges for airlines, including revenue management (RM) and distribution since total revenue maximization requires consideration of ancillary revenue and ticket revenue. In this thesis, we: (1) describe trends contributing to the movement towards ancillary revenue; (2) present three methods for incorporating ancillary revenue into revenue management and distribution; (3) evaluate the revenue performance of these methods using the Passenger Origin Destination Simulator (PODS), a competitive airline simulator. One method of including ancillary revenue into RM is RM Input Adjustment with Class Level Estimates, which involves modifying input fares to the optimizer. Because fare values to the optimizer are aggregated by market and class, the airline uses class level estimates of ancillary revenue potential to augment fares. Another method involves modifying the fare value at the time of availability control, or Availability Fare Adjustment. In network optimization, the availability fare refers to the fare used to compare an itinerary-class to the control mechanism, like displacement adjusted virtual nesting (DAVN) or additive bid price (ProBP). Availability Fare Adjustment with Class Level Estimates also involves using class level estimates of ancillary revenue. Alternatively, we test scenarios where the airline estimates ancillary revenue for individual passengers in Customized Availability Fare Adjustment with Passenger Specific Estimates. Although this type of estimation is not feasible yet, results from Customized Availability Adjustment give a theoretical bound to revenue gain. We nd that incorporating ancillary revenue opens availability for lower yield passengers. Revenue increases occur from extra bookings in these classes because more bookings are taken. Revenue losses occur from higher class passengers buying down to cheaper seats. Without willingness to pay (WTP) forecasting, net revenue losses of up to {2.6% are observed. In advanced RM systems with WTP forecasting, revenue gains of +0.6% are observed for Class Level RM Input Adjustment, +0.9% for Class Level Availability Fare Adjustment, and +2.6% for Passenger Specific Customized Availability Adjustment.
Author: Dr Harrison Sachs Publisher: ISBN: Category : Languages : en Pages : 78
Book Description
This essay sheds light on the future of the airline industry and explicates how emerging technologies will revolutionize the airline industry. Moreover, the benefits of leveraging robots in the airline industry are demystified in this essay. Furthermore, how to earn substantial money online so that you can afford to procure your own airplane is expounded upon in this essay. The future of the airline industry will not only be characterized by dynamism as it continues to metaphorically evolve, but will also be eminently auspicious for passenger airlines and customers. Technological advancements are profoundly changing the airline industry and are rendering it all the more technology driven. The behemoth airline industry shows no signs of decelerating anytime in the imminent future. Passenger airlines are poised to have prosperous, lucrative, and auspicious futures as disposable incomes rise among tourists and as the desire to travel builds traction worldwide among prospective tourists. "Globally, commercial airlines generated combined revenue of around $838,000,000,000 in 2019. In 2009, the commercial aviation industry entered a golden age. Between 2009 and 2019, revenue in the global aviation industry grew at a compound annual growth rate of around 5.3%, reaching $838,000,000,000 dollars in 2019. The sector's improved financial performance is the result of a rising number of air cargo and passenger figures, which in turn are driven by a world that is increasingly becoming more and more affluent and interconnected" ("Revenue of commercial," 2020). Traveling is a luxury that more and more customers are able to avail themselves of in the digital era. In the digital era, you can travel on the cheap by vicariously traveling through other travelers via experiencing their epic escapades and adventures unfold in the form of captivating travel videos. Travel videos can even feature meticulously walkthroughs and tours of your favorite foreign countries and destinations. This vicarious traveling experience only requires you to have an internet connection and computer or smart phone in order to indulge in embracing. Being able to seamlessly vicariously travel to foreign countries by watching the travel videos of content creators on social media websites has culminated in raising global interest for traveling. Customers want to travel to the destinations that they have only caught a glimpse of in videos. The growing interest in traveling among customers has contributed to the robust growth of the airline industry. Customers are all the more enticed to travel to foreign countries once they have vicariously traveled to foreign countries from having watched travel videos on social media websites that feature the adventures of their favorite content creators in foreign countries. The advent "of low-cost airlines" ("Revenue of commercial," 2020) has rendered traveling all the more affordable for tourists. "The evolution of ancillary revenue streams and automated ticketing technologies, as well as the ongoing deregulation of civil aviation in many markets worldwide have given rise to the emergence of low-cost airlines. Ryanair, the Irish airline that may even be dubbed an ultra-low-cost carrier (ULCC), and Southwest Airlines are the main players in the low-cost airline category, which is attracting a growing customer base. In this segment, many carriers have taken to charging their customers for ancillary services in order to boost revenue. Low-cost carriers are so successful that upstart airlines, such as WOW Air, La Compagnie, or Norwegian, are trying to enter the market" ("Revenue of commercial," 2020). In the coming years, demand for low-cost airfares is apt to surge as more and more low income customers seek to travel to foreign countries. Much to the benefit of prospective tours, low-cost airlines have rendered traveling to foreign countries all the more affordable for low income customers.
Author: Nawal K. Taneja Publisher: Routledge ISBN: 1317183061 Category : Business & Economics Languages : en Pages : 356
Book Description
Many business sectors have been, and are being, forced to compete with new competitors-disrupters of some sort-who have found new ways to create and deliver new value for customers often through the use of technology that is coupled with a new underlying production or business model, and/or a broad array of partners, including, in some cases, customers themselves. Think about the disruption created by Apple by the introduction of the iPod and iTunes, and by Netflix within the entertainment sectors using partners within the ecosystem; think of Uber that didn’t build an app around the taxi business but rather built a mobility business around the app to improve customer experience. Airline Industry considers whether the airline industry is poised for disruptive innovations from inside or outside of the industry. Although airlines have a long history of continuous improvements and innovation, few of their innovations can be classified as disruptive innovations. The few disruptive innovations that did emerge were facilitated, for example by new technology (jet aircraft) and government policy (deregulation). Now there are new forces in play-customers who expect to receive products that are more personalized and experience-based throughout the entire journey, new customer interfaces (via social media), advanced information systems and analytics, financially powerful airlines based in emerging nations, and the rise of unencumbered entrepreneurs who think differently as well as platform-focused integrators.
Author: Peter Belobaba Publisher: John Wiley & Sons ISBN: 1118881141 Category : Technology & Engineering Languages : en Pages : 536
Book Description
Extensively revised and updated edition of the bestselling textbook, provides an overview of recent global airline industry evolution and future challenges Examines the perspectives of the many stakeholders in the global airline industry, including airlines, airports, air traffic services, governments, labor unions, in addition to passengers Describes how these different players have contributed to the evolution of competition in the global airline industry, and the implications for its future evolution Includes many facets of the airline industry not covered elsewhere in any single book, for example, safety and security, labor relations and environmental impacts of aviation Highlights recent developments such as changing airline business models, growth of emerging airlines, plans for modernizing air traffic management, and opportunities offered by new information technologies for ticket distribution Provides detailed data on airline performance and economics updated through 2013
Author: Adam Bockelie
Author: Yuxuan Lu (S.M.)
Author: Ben Vinod
Author: Alessandro Cento
Author: John F. O'Connell
Author: Dr George Williams
Author: Eric C. Hao
Author: Dr Harrison Sachs
Author: Nawal K. Taneja
Author: Peter Belobaba