Application And Research On Airline Revenue Management In Chinese Domestic Airline Markets

Revenue Management has been developed rapidly and applied successfully in many airlines in the world since the deregulation of U.S. airline industry. At that time, the "fare war" immediately followed and price competition caused economic loss among most airlines except for few airlines which practiced revenue management strategies. Recent years, Chinese airlines are facing with the same problem in domestic aviation market. In the circumstance, Major domestic airlines have bought the revenue management system to cope with these changes in China and challenge to entrance of overseas airlines. Studies on the successful experience of foreign advanced airlines which made use of revenue management system, both operational and managerial innovation have had been occurred. So it is important to focus on not only the theory research but also the application experience for domestic airlines when using a proper revenue management system.The thesis based on the revenue management theory those have had been applied entirely and aimed at discussing the application and development of revenue management system in domestic aviation market.Hence, in the thesis, conception and the evolution of revenue management are introduced. With the first step of deregulation in China, airlines fell into an awkward economic predicament, it is necessary to improve the abilities on airline management and operation. So airline revenue management suitable for Chinese airlines is emphasized after deep consideration. Furthermore the economic characteristic of aviation market is and analyses on the air travel demand and consumer decisions leads to the multi-fare structure.Major procedure in revenue management is forecasting, overbooking and seat inventory control. Data collection methods are the base of forecasting and then several reservations forecasting modules are simulated. Traditional demand forecasting modules are still useful and efficient according to the Chinese airline market nowadays. The demand forecasting methods picked are means model, added pick-up model, multiplicative pick-up model, linear regression, logarithmic regression, ESP and ARIMA.Overbooking performs another role in revenue management. Although overbooking is hardly acceptable in China, the evidence shows that overbooking can also maximize the revenue. Simple description is made on cost-based overbooking and overbooking without consideration of cost.Seat inventory control focuses on the leg-based and O&D seat inventory control. With the restriction of Inventory Control System (ICS) in China, much attention is paid to leg-based EMSR and multi segment control. For the long run, O&D seat inventory control will be applied. Four methods on origin-destination network are mentioned: GVN, DAVN, HBP and ProBP.It is shows that application on revenue management system which is proper for Chinese airline can improve airline's revenue. It is the challenge for domestic airline to apply revenue management on domestic aviation market successfully with the revenue management system developed by our own. Application and research of revenue management support decision system is beginning in our nation. Suitable and stable system should be improved as the actual conditions changes.