ABSTRACT
This chapter introduces the concepts of airline pricing policy and revenue management. Pricing policy and practices in the airline industry refer to how an airline sets its ticket prices based on demand, cost, and market competition. In the airline industry, pricing policies are often dynamic; prices change daily and vary from airline to airline. Cost-based pricing is one of the simpler approaches to pricing. It refers to the process in which prices are determined on the basis of costs plus an additional profit expressed as a percentage of the cost. Markup pricing has several advantages as well as disadvantages. Upon entering a market, an initial pricing strategy is selected. This strategy depends on the nature of demand for the product/service and takes the form of either market skimming or penetration pricing. Peak-load pricing is the practice of charging higher prices when demand for a service or product is at its highest.
