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Airline Yield Management Software Cannot Deal With Current Scenario

Art Iger, our friend at J.P. Morgan Chase, pointed out an article in yesterday's San Jose Mercury-News which discusses the huge problems that airlines are having filling seats on their flights. The article focuses on yield management software, statistical price modeling software that uses past demand for seats to determine future seat pricing. The issue is that the incidents of September 11 introduced a huge discontinuity in demand, and that has resulted in a significant reduction in the percentage of filled seats, which has persisted until now.

The concept of yield or revenue management is an interesting one to study. If you are interested, we highly recommend the book Revenue Management by Robert G. Cross as a non-technical overview. It is also available as an audiobook.

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