An Analysis of the Pricing Decision under the Influence of Revenue Management and Market Condition - The Example of the Domestic Air Market in Taiwan

Revenue Management (RM) has become a common practice in the airline industry worldwide since American Airlines successfully implemented it in the mid 1980s to beat the entrants in the post-deregulation era. As a core technique of RM, price differentiation is put into practice though the multi-fare scheme, which results in significant price dispersion in the market. At the same time, the implementation of price differentiation is believed to be closely related to market condition. The objective of this study is thus to examine the relationship between revenue management and market condition through the example of the domestic air market in Taiwan. This empirical study establishes several multiple linear regression models, in which ticket discount is chosen as the dependent variable given the partially-deregulated environment for fare control. With an aim to conduct a comparative analysis, it is found that the result is in general consistent with those in the prior empirical studies focusing on the U.S. and Europe domestic air markets and provides more evidence from the practical viewpoint regarding how airlines react to market condition while making the pricing decision. In particular, this study further employs two interaction models to investigate the impact of one independent variable on another. The results show that the interaction models provide insightful explanations about how the implementation of RM is affected by other factors.

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: References; Tables;
  • Pagination: pp 23-31
  • Monograph Title: Proceedings of the International Forum on Shipping, Ports and Airports (IFSPA) 2012: Transport Logistics for Sustainable Growth at a New Level

Subject/Index Terms

Filing Info

  • Accession Number: 01482968
  • Record Type: Publication
  • ISBN: 9789623677578
  • Files: TRIS
  • Created Date: May 29 2013 2:52PM