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Recite a prayer….(15 seconds)

Recite a prayer….(15 seconds). Course Contents. Content 8 chapter: Chapter 1:FUNDAMENTAL OF AM. Chapter 2:MARKET FOR AIR TRANSPORT SERVICE. Chapter 3:MARKETING ENVIRONMENT& AIRLINE BUSINESS Chapter 4:PRICING AND REVENUE MANAGEMENT

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Recite a prayer….(15 seconds)

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  1. Recite a prayer….(15 seconds)

  2. Course Contents Content 8 chapter: Chapter 1:FUNDAMENTAL OF AM. Chapter 2:MARKET FOR AIR TRANSPORT SERVICE. Chapter 3:MARKETING ENVIRONMENT& AIRLINE BUSINESS Chapter 4:PRICING AND REVENUE MANAGEMENT --------------------------------Mid-term------------------------------------------ Chapter 5:DISTRIBUTING OF THE PRODUCT AND BRANDING Chapter 6:RELATIONSHIP MARKETING Chapter 7:AIRLINES SELLING,ADVERTISING&PROMOTE Chapter 8:THE FUTURE OF AM ----------------------------------Final exam--------------------------------------

  3. CHAPTER 4 Pricing and Revenue Management

  4. Learning outcome • Know the different facets of airline marketing. • Fundamental issues pertaining the revenue management in airline marketing

  5. Who are they??????

  6. CHAPTER 4 Pricing & Revenue Management PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Price Deregulation • Dissemination of Fares Information • Revenue Management System • Pricing Policies-Management of Discount Fares • Pricing Policies-The Structure of Air Freight Pricing

  7. CHAPTER 4:Pricing and Revenue Management • Pricing – Part of Marketing Mix • -The product and pricing in airline decisions must clearly • be made together. • -E.g: • -invested large sums - First and Business Class products, better seats, quality catering and improved in-flight entertainment. • -Raised the prices of First and Business Class tickets to provide a return on the investment that has been made. • -read pg:175

  8. CHAPTER 4 Pricing & Revenue Management PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Price Deregulation • Dissemination of Fares Information • Revenue Management System • Pricing Policies-Management of Discount Fares • Pricing Policies-The Structure of Air Freight Pricing

  9. CHAPTER 4:Pricing and Revenue Management 2.Price Deregulation -Government regulatory policy constraint on airlines’ pricing freedom in international aviation -Fares with their respective governments for approval. -Now , airline free to price they like.!!!!! -International Air Transport Association (IATA) to run the Tariff Conferences at which fares have been agreed. Effect…. • Airline gained freedom to innovate with their own promotional prices!! • Get discount!!! Read pg:175

  10. CHAPTER 4 Pricing & Revenue Management PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Price Deregulation • Dissemination of Fares Information • Revenue Management System • Pricing Policies-Management of Discount Fares • Pricing Policies-The Structure of Air Freight Pricing

  11. CHAPTER 4:Pricing and Revenue Management 3. Dissemination of Fares Information -The system for disseminating fares information precluded rapid changes. E.g: -previously: such disseminating was a printed tariff manual. -preparing these manual-would take many weeks!! -Now: the GLOBAL DISTRIBUTION SYSTEMS : travel agent have instant access to a fares database. -pages:175

  12. CHAPTER 4 Pricing & Revenue Management PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Price Deregulation • Dissemination of Fares Information • Revenue Management System • Pricing Policies-Management of Discount Fares • Pricing Policies-The Structure of Air Freight Pricing

  13. CHAPTER 4:Pricing and Revenue Management • Revenue Management System • -the advent of sophisticated systems for managing the sale of seats (and, increasingly, of cargo space). • -In deciding on pricing policies which will optimize financial returns , carriers must decide on the number of seats they will sell, at what prices and in what currencies. • -Airline attempts to produce the systems which allow them to optimize revenue. • -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 . • Pages:176

  14. CHAPTER 4 Pricing & Revenue Management PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Price Deregulation • Dissemination of Fares Information • Revenue Management System • Pricing Policies-Management of Discount Fares • Pricing Policies-The Structure of Air Freight Pricing

  15. ~~WHO LOVE DISCOUNT~~

  16. CHAPTER 4 Pricing & Revenue Management • Pricing Policies-Management of Discount Fares • a) To control of discount fares is exercised in 2 ways: • I. The revenue management systems I used to decide on the number of low-fare seat available on different flight. • EG: off-peak flight, low prices or seat empty • :on-peak flight, high prices to force passenger to travel. • II. By setting condition to the discount fares, making it less attractive to the Business Traveler. • EG : Too much condition and term.

  17. Pricing and Revenue Management • 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

  18. Pricing and Revenue Management • 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. • Page:183

  19. Pricing and Revenue Management 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

  20. Pricing and Revenue Management • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Advance Purchased • - must book and 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

  21. Pricing and Revenue Management • 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

  22. Pricing and Revenue Management • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • 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

  23. Pricing and Revenue Management • 5. Pricing Policies-Management of Discount Fares • b) The Major Types of Discount Fares Conditions • Fares only available 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

  24. CHAPTER 4 Pricing & Revenue Management PRICE MANAGEMENT • Pricing – Part of Marketing Mix • Price Deregulation • Dissemination of Fares Information • Revenue Management System • Pricing Policies-Management of Discount Fares • Pricing Policies-The Structure of Air Freight Pricing

  25. Pricing and Revenue Management • Pricing Policies-The Structure of Air Freight Pricing • Factors of consideration • Varies in size from small packages to 30,00 kilos of consignment • Fixed documentation and customs clearance cost • Commodity types vary special costing for extra services, e.g.., security, refrigeration, fragility, etc • Density-airline must charges shipper of low density freight on a volumetric basis.

  26. Pricing and Revenue Management • 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 • Specific Commodity Rates • - rates, commodity and routes define by IATA • - too complex and not being followed

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

  28. Pricing and Revenue Management • 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

  29. Pricing and Revenue Management • 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

  30. Q-bank • Please explain how the airline can control their discount fares? • Please explain 3 of Major Types of Discount Fares Conditions that you know. • What the factor of consideration for the Structure of Air Freight Pricing? • Explain the meaning of Discount Fares and give 2 example from the major type of Discount Fares offered by airlines? • What are the characteristics of the Express Market in Air Freight business?

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