Simulating revenue management in an airline market with demand segmentation and strategic interaction

This paper develops a computer simulation to investigate the consequences of revenue management by airlines on the Brazilian Rio de Janeiro–São Paulo route, in the period subsequent to the second phase of liberalisation of the industry in 1998. The model allows demand segmentation — namely, the typology of Belobaba (‘Airline differential pricing for effective yield management’, in Handbook of Airline Marketing, McGraw-Hill, New York, 1998) — and airline strategic interaction — a revenue management game. Simulation results revealed gains in effciency and nonglobal conditions of superiority in comparison with the extreme alternative of ‘first come, first served’ policy with uniform pricing.