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.

Spot the yield/revenue management! (2)

Another area of yield/revenue management that wasn't mentioned before is that of green fees at a golf club. High at weekends and holidays, low during the week.

Spot the yield/revenue management!

When I was a child, there was a very popular series of cheap books called "I spy". In each one there were about 30 to 50 items that one might see in a chosen situation. "I spy in London", "I spy in a hospital", "I spy on the railways" and so on. There were brief explanations of each item, and a point score alongside; common items scored 5 to 20 points, rarer ones might score 40 or 50. (One of the latter, I recall, was seeing a valley with river, road, railway and canal alongside each other.) There was also space to note where and when the item had been seen. The books were educational and fun; some facts were in them which I never encountered elsewhere in my education.

I am thinking that there should be a similar book for yield/revenue management. "I spy RM". Increasingly, RM enters our daily lives. The text books tell us that it was largely a product of the 1980's and airline management, but the roots of it go far further back, to hairdressers who charge different prices on different days of the week, and hotels which have weekend rates. So where can one spot RM today?
(1) Transport especially in the UK on flights and rail journeys, but there are cases of coach and bus travel;
(2) Hotels -- certainly if you Google for the topic, it is RM in hotels that comes out top, possibly because hotel management is diffused compared with the centralised management of airlines.
(3) Restaurants and other food and drink outlets
(4) Theatres and (slightly) cinemas
(5) Delivery of goods -- this encounter was what prompted me to blog today; we decided to order from a supermarket for home delivery and discovered that there were different prices for different two hour delivery slots. (We only decided to use the service because we had a £10 off voucher, which more than covered the deleivery charge at any time.)

Are there other, even rarer cases of RM?

In IAOR, the research papers are indexed under Yield Management, not RM. I have found that the expression Revenue Management is used by accountants to describe budgeting, so I prefer to use Yield.