The Economic

Supply and
Demand

Part 1

Introduction to Revenue
Management

Part 2

Understanding and Managing

the Revenue

Part 3

Revenue Management in
Airline Industry


(Week
Number)

/
(Date/Month)

/
(Topics)

Part one: Introduction to Revenue Management

21 2558

Introduction to the course

28 2558

Revenue Management

Part two : Understanding and Managing the Revenue

4 2558

The Economy and Supply and Demand: Group 2, 9

11 2558

The Market: Group 6, 8

18 2558

Segmentation: Group 3,4

25 2558

Pricing and Value Perception: Group 1,5

2 2558

Revenue Manager: Group 7

9 2558

Review for Mid-Term Exam

14 2558

 (Demand)
Price

- Price at 10 will have no demand.

- An increase in price from 6 to 8 will cause a
reduction of quantity sold from 8 to 4 units.
- If price is zero, the quantity will be 10 units.
- Slope of demand demonstrates a change of
Q when p changes by 1 unit. (-1)

10
8
6

10

Quantity

 (Demand)
Price

10
8

(price)

10

Quantity

Shift of Demand Curve

?

Price

1.
2.
3.
4.
5.

10
8
6

10

Quantity

Shift of Demand Curve

Revenue ?
: Line BN305Friday
/ 5501112215/LEFT

Price
10
8

RIGHT ?

LEFT ?

10

Quantity

 (supply)
Price
Supply

10
6
Slope of supply
indicates a change of
Q in response to a
unit change in price
(0.5)

10

Quantity

 (supply)
supply ?
Price
Supply

10

(price)

10

Quantity

 (supply)
supply ?
Price
Supply

10
6

10

1.
2.
3.
4.
5.

Productivity

Quantity

 (Demand) (Supply)
Price

The equilibrium price

and quantity are set
where demand
intersects supply

P*

Q*

Quantity

AA Airlines
Demand & Supply

AA Airline: Demand Curve

Price
900
1230
1590
1810
2030

Qty
180
150
120
100
80

AA Airline: Supply Curve

Price
900
1230
1590
1810
2030

Qty
180
180
180
180
180

? demand curve 180

Revenue AA Airline /flight

Price
900
1230
1590
1810
2030

Qty
180
150
120
100
80

: Line BN305Friday
/ 5501112215/35200

AA Airline: Yield
Price
900
1230
1590
1810
2030

D. Qty S. Qty Opt.RM.

180 180
0
150 180
0
120 180
0
100 180
100
80
180
80
630
180

From: 900 x 180

= 162,000

RM
0
0
0
181000
162400
343,400

+ 181,400

To: (2080 x 80) + (1810

x 100) = 343,400

AA Airline:
Shift of Demand Curve
Price
900
1230
1590
1810
2030

2000

Qty
180
150
120
100
80