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Aviation Management College

AIRLINE MARKETING. Aviation Management College. Pricing and Revenue Management. Pricing and Revenue Management. AIRLINE MARKETING. Aviation Management College. PRICE MANAGEMENT Pricing – Part of Marketing Mix Pricing and product, interrelated 1 st Class, Business Class, Economy Class

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Aviation Management College

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  1. AIRLINE MARKETING Aviation Management College Pricing and Revenue Management

  2. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Pricing and product, interrelated • 1st Class, Business Class, Economy Class • ROI on better seat, catering, in-flight entertainment • Set-back: recession and overcapacity

  3. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 2. Price Deregulation • - Intergovernmental Air Service Agreement (prevent competition even domestic) • - Regulatory pricing no longer relevant • - freedom to innovate promotional • fares (IATA – Tariff Conferences) • - need to have knowledge in • competitive pricing

  4. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 3. Dissemination of Fares Information • In the past once or twice a year due • time needed to printing and distribution to travel agents, • Now active price competition, fare • structure become highly unstable • Challenges: making the right price, • quickly and under great pressure

  5. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 4. Revenue Management System • Optimising financial return • Deciding on the number of seats, what price and what currencies

  6. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • Revenue Management System - cont • Examples: • - Business destinations; few seats for early sales at low price, mostly for short time bookings at high prices • - Sunday, same destination; most are allocated for low price and FFP

  7. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • Revenue Management System – cont • Problem and concern • Connecting versus point-to-point • - connecting, short sector to fly to hub • - P2P, short-haul route flying in and out • - tendency to turned away long-haul • connecting pox • - a loss in network revenue

  8. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • PRICE MANAGEMENT • 4. Pricing policies - The Pricing Principles • a) Fare Structure - Fare Structure – KUL/LHR Fare Price Terms/conditions Buss Class RM7,000RTN -- Economy RM4,000RTN point-to-point Offer RM1,500RTN 1 week stay, for Oct to Dec, mid-week Day flight

  9. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 4. Pricing Policies - The Principles – cont • b) Price elasticity – what is it? • - Business market versus Leisure market • - Corporate pax vs. individual pax

  10. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College Price elasticity – definition The proportionate change in sales of a product as a result of a change in price The demand for a good is relatively inelastic when the change in quantity demanded is less than change in price. Goods and services for which no substitutes exist are generally inelastic. Eg. , a good antibiotic that can cure asthma instantly, customers are willing to pay at whatever price.

  11. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • PRICING POLICIES • The Principles – cont • Lower seat-kilometer cost – bigger planes • Uniform pricing vs. differential pricing • - may end up customers paying higher prices for a worse product they currently received • - traveler may think that they are being overcharge

  12. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing Policies-Management of Discount Fares • a) Discount fares are mostly offered in 2 ways: • The number of discount seats offered varies during off-peak and peak season • By setting condition to the discount fares, making it less attractive to the Business Traveler

  13. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing Policies - Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Minimum Stay Conditions • Maximum Stay Conditions • Advance Purchased • Standby • ‘Preferential’ Fares • Fares As Part of a Tour Package

  14. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Minimum Stay Conditions • - need to stay for a specific number of days • - going home early will require paying the • full fare price • - short-haul; a stay until the weekend, • - long- haul; about about a week stay • - most effective conditions.

  15. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College 5. Pricing Policies-Management of Discount Fares b) The Major Types of Discount Fares Conditions ii. Maximum Stay Conditions - a maximum length of time, pax can stay - if they stay longer, have to pay full fare - less effective method

  16. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Advance Purchased • - pax must pay for their ticket in advance • - penalty for cancellation or changes • - help to improve cash flow • - force the low yield traffic to come forward • - not encouraging Business Traveler to buy

  17. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Standby • - can be booked at any time • - seats are not guaranteed • - money returned or wait for next flight • -

  18. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions-cont • v. ‘Preferential’ Fares/Discriminatory Fares • - divided into 2 groups • 1st , Stage of life fares : offered to children. • Young people and senior citizen • 2nd, Occupation related fares: given to • seamen, military personnel and diplomats

  19. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Fares As Part of a Tour Package • - this is inclusive of accommodation and other features of holiday package., golf, spa, sigh-seeing, etc • - mostly offered through the travel agents • - not popular among Business Traveler

  20. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • Factors of consideration • a) varies in size from small packages to 30,00 kilos of consignment • b) fixed documentation and customs clearance cost • c) special costing for extra services, e.g.., security, refrigeration, fragility, etc

  21. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • Factors of consideration-cont • d) Additional revenue to pax flight • e) Advantage to long-haul ands peak time `

  22. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • ii. 2-Types of Freight Pricing • General Cargo Rates • - high minimum charges for smaller shipments • - discount for larger consignment

  23. AIRLINE MARKETING Aviation Management College Shipment the act of transporting the goods Cargo goods carried by ship or plane Consignment goods to be delivered

  24. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • ii. 2-Types of Freight Pricing-cont • Specific Commodity Rates • - rates, commodity and routes define by IATA • - too complex and not being followed

  25. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • iii. Express Market • - urgent shipment • - integrated carriers • - UPS, FedEx, DHL, TNT • - guarantee next morning delivery

  26. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • iv. General Freight Market • - rates based on negotiation • - rates based on supply and demand • - discounts for deferred delivery

  27. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College • 6. Pricing Policies-The Structure of Air Freight Pricing • Express Market-cont • - slower but time define delivery • - peak to off peak cargo • - door-to-door • - followed by pax airlines

  28. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College What are the characteristics of the Express Market in Air Freight business?

  29. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College Explain the meaning of Discount Fares and give 2 example from the major type of Discount Fares offered by airlines?

  30. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College Have a Nice Day do make sure 2moro is a better day than 2day

  31. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College

  32. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College

  33. Pricing and Revenue Management AIRLINE MARKETING Aviation Management College

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