ABSTRACT
For decades the largest percentage of an airline's revenue has been generated by the sale of its basic product. This chapter provides an overview of the transformational opportunities that are being followed by leading airlines. It discusses the transformational strategies at the functional level: network, fleet, and schedules; day of operations; revenue management; and dynamic merchandizing that calls for a high level of cross-functional integration within airlines. These functions are not new except for dynamic merchandizing. Airline leaders are clearly looking for ways to grow in the increasingly changing marketplace while working within the constraints of the airline industry, remain agile and flexible, and take on complexity that is manageable. The function of revenue management has been a game-changer within the global airline industry for more than four decades, allowing carriers to offset some of the negative factors associated with a perishable product, fixed capacity, high fixed costs, and low variable costs.
