Perishable asset revenue management: Integrated Internet marketing strategies for the airlines

This article outlines the essentials of perishable asset revenue management (PARM), that is, yield management and overbooking strategies for the airlines. Recognizing that the airline industry is characterized by high fixed costs, high constant cost, and low variable costs, and with excess capacity and highly segmentable markets with different price sensitivities, it is primed for market segmentation and price discrimination. The Integrated Internet Marketing (IIM) concept is then proposed to achieve PARM goals, consistent with customer needs. The advantages to the airlines of IIM in the areas of pricing, inventory, promotion, distribution, customer relationship marketing, internal marketing communications, and data mining are then outlined, as well as the attendant advantages of IIM to customers. Two Web-based experiments on differential airline pricing are undertaken to show that it pays to visit several online Web sites to get the best fares, especially on the day of departure.