Issue link: https://pros.com/learn/i/1207038
10 Breaking Down Willingness-to-Pay in RM www.pros.com The benefits of PROS WTP Forecasting and Optimization include both a revenue improvement as well as more flexibility in the model for the analyst in the changing business environment. The revenue improvements have been studied using both simulation methods as well as with real data. The results consistently show an improvement of between 1% and 3% over traditional revenue management controls where the fare classes are Benefits As the airline industry continues to evolve to keep up with market shifts and competitive environments, airline revenue management systems must evolve and modernize with it. One of the biggest evolutions related to revenue management is the way the price and product are presented in the market and how the price sensitivity of the passenger is considered. Airlines have approached this with unscientific, rules-based methods, which at best prevent significant revenue dilution and at worst cause more revenue dilution. The solution to this is to perform scientific forecasting and optimization steps to best capture the price sensitive demand and adjust availability accordingly. With PROS WTP methodology, PROS has built upon previous Conclusion experiences from traditional and hybrid forecasting and optimization to build the next stage in modernizing the revenue management. The WTP model uses the observed bookings and the fare of those bookings to estimate a continuous price/demand curve. These forecasts are then discretized to the class level and sent to optimization where optimal controls can be generated. This data is seamlessly integrated with PROS RTDP to distribute accurate and timely availability. This solution has proven benefits in both simulation and with real airline data. Studies have shown between 1 and 3% revenue uplift over a traditional O&D revenue management system. assumed independent. The improvement is on top of the benefits already achieved by moving to O&D-level forecasting to take into account the network effect. The revenue benefits will be dependent on the market characteristics, including the competitive environment, fare fences/conditions, and the price sensitivity of passengers.