Abstract
The purpose of this paper is to demonstrate bmi's pricing and revenue management response to the changing European airline marketplace. Prompted by the low-cost carriers, bmi challenged the traditional full service airline pricing and revenue management practices and, as a result, changed its business to a one-way, restriction-free environment in spring 2002. Traditional revenue management optimisation techniques and performance measurement are no longer valid under such a pricing model — classes are no longer independent entities; rather there is a single fare on a flight at any one time. The revenue management problem is now one of how to calculate the optimum fare to charge at any point pre-departure, and various methods have been adopted by bmi to manage this process.
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