After the deregulations in the airline industry, the revenue management techniques have become inevitable for airline seat inventory control. Revenue management is the process of selling the limited perishable capacity to the right customers at the right prices so as to optimize the total revenue. Classic examples of RM can be found in the airline and hotel industry where there are finite number of seats and hotel rooms, respectively (Mou and Wang 2014). The main problem in airline revenue management is to determine booking control strategies. Airlines seldom charge the same fare for each seat on a flight, but instead price seats based on customer’s willingness-to-pay.
During the 2011, Ryanair have decided to decrease the airfare rate as a lower cost airline, but the controversy started when they started charging passengers for various reasons that are not necessary. The passengers concluded it as the cheaper but not cheerful airline. Ryanair charged extra for the name change on the passengers boarding pass, a boarding pass fees, excessive luggage fees per kilo, credit card use fees of the total amount, a checked musical instrument fees, a reserved seat fees, and the charges for a water bottle that requested by the passengers. Besides that, Ryanair also happened very often in poor customer service, hidden credit card charges, frequent delays the flights, and extra payments for fees or taxes. Nevertheless, the main controversy was caused by the charges where happened inside the cabin of the plane.
The company also operates point-to-point service that is not part of the mainline network. This enables Delta Express to operate point-to-point service that is not part of mainline operations. Delta Express gains leverage from being offer Delta SkyMiles frequent flier points. They introduced seasonal fares and constantly keep costs down. Even though the industry remains intensively competitive now, most the carriers have a route system well suited to their individual strengths, and fewer carriers have a route system well suited to their individual strengths, unlike fewer carriers are on the verge of bankruptcy or struggling to maintain the turnover.
There are also cost that are irrelevant to be charged to the passenger such as delay or cancellation fees that make the substitution are readily in the market because other airlines company are not charging their passenger with this kind of costs. All in all, Ryanair Holdings is not a sustainable competitive advantage in the long run since the company is not fully satisfied the above four criteria. Thus, the company should look forward in reducing any unnecessary cost that could escalate the cost of the trip in order to ensure the loyalty of the passenger and being able to sustain in the long run with a stable competitive
Operating below break-even volume results in an airline losing lots of money quickly. Operating above break-even volume results in an airline making lots of money quickly. This is why the airlines can have lots of sales promotions and discounts—they had rather have a passenger in a seat making some unit contribution than have that seat be empty and produce no unit contribution. In this type of business, a company varies its pricing to produce the volume it needs. The text discusses dynamic pricing—charging different prices depending on individual customers and situations.
The simple task of booking flight tickets has become a science in its own right. People, these days, prefer booking tickets themselves instead of buying from the travel agents in order to save more on their flight tickets. The travelers have a myriad of variables to take into account when plotting air travel – from the distance of journey or the type of services offered – but the other side of the story is that the airlines companies try their best to ensure maximum revenue while ensuring offering best prices on tickets. The airlines companies use the most sophistic software to adjust fares dynamically that consider the performances of its routes and services around the world. Understanding the factors that affect your flight ticket prices used to a confusing process in itself, but not anymore as the codes have been decoded by the experts and we’d like to share with you some of the top factors.
Have to pay for several rooms, no common room is offered by the hotels for socializing, share time or for relaxation and it is expensive and not convenient. A group of nine members planned for a trip to the LA and they booked an expensive hotel, but all the members were not able to fit into one suite and had to take separate rooms which are quite expensive. In this case the rental website, Airbnb was a perfect option because there were many estates, mansions and private apartments available in Hollywood with affordable costs. The group was able to book a private estate that had a fantastic are for relaxing with a private pool and comfortable for all the members. And these kind of rental property sites offer many deals and discounts for families and large groups.
As a result, mechanics spend less time training on different types of aircraft, and they spend more time actually working. This greatly reduces their explicit costs by allowing them to hire a few amount of workers. When Southwest purchases their planes from Boeing, they receive discounts for buying the 737 in bulk quantities (Economist). Lastly, while Delta Airlines charges customers for checking in luggage, Southwest allows passengers to check in baggages for free. This gives consumers a financial incentive to fly with Southwest, and thus their demand does not
The elasticity of demand is greatly affected by the customer's purpose for travel. Airline customers typically fly for business or pleasure. With the wave of technology, a large percentage of business travel has been eliminated to conserve
Moreover I have to face the traffic jam in the road. It will be exhausting for me to drive a car to travel for 40 miles away. Travel by airplane nowadays is very easy. I can book or buy ticket via online through website who sell ticket, for example: traveloka.com or pegipegi.com. After I choose my flight and date, I just have to transfer the fee of the ticket via mobile banking or internet banking.