Research On Revenue Management Pricing Of Private Airlines In China

When the market is oligopolistic, the implement of differential pricing system is a dominant behavior for the airlines. The methods to set differential price mainly contain multi-level differential pricing and dynamic pricing, which both belong to the scope of revenue management.Most airlines in China, including the private airlines, have adopted multi-level differential pricing currently, but there are some deficiencies in this method. First, the market segmentation for domestic airline passengers does not have a precise criterion, resulting in the process of setting the ticket prices non-standard; second, the ticket restrictions of private airlineare are often relatively simple and does not effectively prevent high-yield passengers to buy cheap tickets; third, this method usually requires the airlines to implement seat inventory control, that is to say the airlines decide whether to accept the purchase requirements of some passenger ticket according to the supply-demand relationship, and that means the implementation of revenue management does not adequately take into account of the passenger's choice behavior, so a series of problems such as information asymmetry between airlines and passengers exists inevitably.The combination of multi-level differential pricing and seat inventory control is known as the Traditional Rrevenue Management model, and the above analysis shows that this model have some deficiencies, so we advise the private airlines adopt a more effective and new revenue management model - dynamic pricing -to regulate the the pricing process and improve their yield level.Based on the existing dynamic pricing model of monopoly environment, this paper construct a continuous-price model using dynamic recursive method for a competitive environment, and put comprehensive analysis of the private airlines on the application of the model. Dynamic pricing model of monopoly environment take fully into account the behavior of supplier and demander, and in a competitive environment, the model not only take into account the effect of their own supply and demand on the best prices, but also the supply and prices of their competitors. This paper analyses the application of dynamic pricing model of private airlines using simulation data and the results show that the model is effective and as an complex and effective revenue management model, dynamic pricing will be a better option for the private airlines in the future.