YIELD MANAGEMENT

Yield Management

Yield Management

Section One

It is extremely essential and the most important aspect that the companies in any industry or sector takes care of. Therefore, the best resources and strategies are used by the companies to ensure that their profits and revenues are high. More importantly in the airline industry, the companies use yield management strategy to enhance the productivity. This paper highlights the advantages of using yield management and the way in which it helps the companies in maximizing the airline revenue. Furthermore, it also explains the way in which different airlines use it to gain competitive advantage and the way in which it will be developed for future airline competition strategies.

Advantages and Disadvantages of Yield Management

With regards to the advantages, it can be said that the advantages are immense. However, the three main advantages of yield management in the airline industry have been discussed. Firstly, it is often hard to understand why a plane ticket with the same route, on the same aircraft with similar seats, has a different price in different companies. To understand this, it is also important to understand the concept of yield management. It refers to a management system based on the returns and production. It consists of optimizing the application of tariffs for certain products. In other words, aims to increase prices when demand exceeds supply and reduce them when the opposite occurs. The second advantage is that yield management is another way of analyzing the law of supply and demand, and this is mainly because of the appropriate technologies and continually monitored through weekly meetings which are being held. The third advantage of yield management is that the management which is responsible for this technique reviews and rectifies the system prices from a range of indicators that includes speed in the sale of services in a given period of time, the reaction of demand to an increase or decrease in prices, and the propensity to travel on certain dates. However, the major disadvantage with the system is that it does not discriminate and therefore, the loyal customers may not get any benefit because of being a returning customer.

Section Two

Research which was conducted was exploratory, and therefore data was gathered from various websites, online books and journals. With regards to the sampling theory, it can be said that the sampling techniques that have been used were by studying the two airline companies and their practice of yield management. Research indicated that the other names for yield management are revenue management or performance management. It has become part of the theory and practice mainstream business more importantly in the airline industry since the past fifteen to twenty years. Whether an emerging discipline or a new science of administration (it has been called both), the revenue management is a set of strategies and tactics of revenue optimization to improve the profitability of certain companies. Yield management is popular in many disciplines; from which, one is the area of ...