The complexities and challenges of the airline fare management process and alignment with revenue management

Abstract

Fare management is the first step in the revenue planning process. The success of an airline's revenue management programme makes a fundamental assumption that the customer segmentation and associated price points accurately reflect current market conditions. The ramifications of an ineffective fare management process have a detrimental impact on revenue management and can result in less than optimal inventory controls leading to both revenue dilution and potential loss of market share. This paper examines the airline fare management process based on proactive, reactive and demand management tactics, its complexities and challenges and provides recommendations on how to improve an airline's fare management process to generate incremental revenues.