AIRLINE REVENUE MANAGEMENT PERFORMANCE MEASUREMENT

Revenue management is the process of allocating the right type of capacity or inventory unit to predetermined market segments at optimum price in order to maximize profit. Based on demand forecasting and an optimisation model, revenue management systems are the main tool for enhancing profit and the most respected application of operation research in the airline industry today. Key components of a revenue management system are forecasting, overbooking, seat inventory control and pricing. An airline revenue management system performance should be systematically monitored and measured to determine the value of revenue management to the company, to identify opportunities to further incremental revenue and to determine where corrective actions are needed. The paper defines a set of revenue management performance indicators, analyses their disadvantages when used separately and proposes correct combinations of indicators for evaluating different elements of revenue management system.