bmi's response to the changing European airline marketplace

The purpose of this paper is to demonstrate bmi's pricing and revenue management response to the changing European airline marketplace. Prompted by the low–cost carriers, bmi challenged the traditional full service airline pricing and revenue management practices and, as a result, changed its business to a one–way, restriction–free environment in spring 2002. Traditional revenue management optimisation techniques and performance measurement are no longer valid under such a pricing model — classes are no longer independent entities; rather there is a single fare on a flight at any one time. The revenue management problem is now one of how to calculate the optimum fare to charge at any point pre–departure, and various methods have been adopted by bmi to manage this process.