Price volatility and market performance measures: The case of revenue managed goods

•We quantify the degree of price volatility for more than 800 markets.•We demonstrate the potential of price volatility as an information source.•We quantify the relationship between price volatility and market level KPIs.•Higher price volatility associates with higher fares and revenues, but lower...

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Bibliographic Details
Published in:Transportation research. Part E, Logistics and transportation review Logistics and transportation review, 2018-12, Vol.120, p.35-50
Main Authors: Mantin, Benny, Rubin, Eran
Format: Article
Language:English
Subjects:
Airline industry
Dynamic pricing
Market analytics
Market performance assessment
Price volatility
Revenue management
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Summary:•We quantify the degree of price volatility for more than 800 markets.•We demonstrate the potential of price volatility as an information source.•We quantify the relationship between price volatility and market level KPIs.•Higher price volatility associates with higher fares and revenues, but lower load factors. The operational outcome of Revenue Management (RM) is manifested in different magnitudes of market level price volatilities. In this paper we take an analytics approach to the possible use of pricing data of revenue-managed goods to support market analysis. Quantifying the relationship between market-level price volatility in the airline industry and various market-level performance metrics, we find that higher levels of price volatility are associated with higher levels of transacted fares, lower load factors, higher revenues, and increased transacted fare dispersion. This suggests the potential in utilizing market price volatility as an input for market analytics.
ISSN:1366-5545
1878-5794
DOI:10.1016/j.tre.2018.10.005