Revenue Management In The American Airline Industry

Revenue management (RM) was first implemented in the 1970s and practised mainly within the airline industry, also known as airline yield management (Cross, Higbie, & Cross., 2009). Smith (1992) described revenue management as “selling the right seats to the right customers at the right price” (as cited in Schuessler, 2010). In the late 1980s, the hotel industry adopted this practice from the airline industry, with a similar objective to increase revenue. The implementation of RM by American Airline, which achieved an increment of US$1.4 billion and around five percent of total revenue over three years, was an example of revenue management’s success (Wirtz, Kimes, Theng, & Patterson, 2003). In comparison to the airline industry, RM in hotel …show more content…
This view is supported by Mathies and Gudergan (2007), who mentions that as recent purchase experience influences customers’ reference points, it could be determining factors of price fairness perception (as cited in Stenlund, Remy, & Gerstkamp, 2015). Such perception is more frequent when discrepancies are closer to the intended dates searched by experienced customer than the irregular ones (Stenlund et al., 2015), while failure to address the perception will lead to the negative impact on the hotel as mentioned …show more content…
Noone (2017) classified the concept as THRM, which comprise the consideration of different revenue streams, understanding of customer values which equates to CCRM and the switch from top-line to bottom line to include distribution and operating costs. Examples of such non-room revenue streams are restaurants, spas, meeting facilities that are integrating with RM application, and attracting more research in the field, where several studies have been conducted to focus on the implementation strategies (Guillet & Mohammed,