Answer ALL questions. Your answer to each question shall have a minimum of 300 words.

Question 3

Segmentation of the customer market is one of the key components of airline revenue management, in particular on the exercising of price discrimination and capacity discrimination. To maximized revenue while minimize service failure, clear and proper fencings should be built for each identified customer segments.

Briefly explain the concepts of price discrimination and capacity discrimination in the airline

industry, elucidate the concepts with airline examples.

(3 marks x 3 points + 1 extra point = 10 marks)

Discuss 5 different airline customer market segments (for revenue management), identify the

associated pricing terms and conditions and/or capacity rules to ring-fence the customers of

the segments in both revenue-driven and customer-oriented fashions.

(4 marks x 5 points = 20 marks)