Expanding the revenue management frontier: Optimal air planning in the cruise industry

Expanding the revenue management frontier: Optimal air planning in the cruise industry

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Article ID: iaor20061938
Country: United Kingdom
Volume: 1
Issue: 1
Start Page Number: 7
End Page Number: 24
Publication Date: May 2002
Journal: Journal of Revenue and Pricing Management
Authors: ,
Keywords: transportation: general, recreation & tourism
Abstract:

Applications of revenue management usually focus on the sale of products to customers. This paper shows how revenue management can also be applied to a company's purchase of services. We focus on the cruise-line industry, where the purchase of airfare for cruise passengers can exceed 20 per cent of revenues. An outline for an optimal air planning programme is proposed, with emphasis on decision support for routing passengers on flights and negotiating contract fares with the airline. Benefits of such a programme include improving both customer service and relationships with airlines and reducing airfare expenses by 5–8 per cent.

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