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Breaking Down Willingness-to-Pay in RM

Buy-down is common pain point for airline revenue management analysts. Incorporating willingness-to-pay into revenue management forecasting and optimization drives revenue a greater price flexibility.

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PROS pioneered the science to combat buy-down by introducing Hybrid Forecasting and Optimization. PROS has continued the evolution of this approach by implementing the PROS Willingness-to-pay (WTP) Forecasting and Optimization methodology. This whitepaper will outline the key steps to the methodology. These are to forecast the price sensitivity of the demand and then adjust the value of the passenger to account for the dilution through an optimization procedure.

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