Tuesday, 1 June 2010

Revenue management in the news

Two stories about revenue management have been in the news recently. As I heard about them, I wondered what data had been used within the companies concerned to inform the decisions.

Ryanair, the budget airline, has announced that the cost per item for checked baggage will be higher in July and August than at other times. (£15 per item normally, £20 in July/August; those are the online fees; in person at the airport costs more, and so does the second item). Ryanair reckons that the introduction of fees for checked baggage has reduced the number of passengers with hold baggage from 80% to about 25%. Presumably the company expects that there will be an increase during the holiday months, which will mean that they will need more ground staff, more fuel and possibly fewer passengers.

The other story concerns telephone charges. For many years in the UK, phone calls between 6pm and 8am during the week have been cheaper. Earlier this year, BT (British Telecom, phone provider) changed this period to be 7pm to 7am, and recently another supplier, TalkTalk, has followed suit. It is suggested that the motive is more concerned with profits than regulating peak demand, since the hour 6pm to 7pm is not generally used for business calls, more for domestic. It may be that there is high demand for domestic internet services in the early evening, and therefore this is an attempt to shift telephone demand away from that period. But the companies are not saying.

One of the speakers on this subject was described as working in "Pricing consulting" and I thought to look up such businesses on the internet. I really should know better! "Pricing consulting" led to numerous pages advising how much to charge for consultancy! The perennial problem of words which can be nouns or verbs.

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