Airline Revenue Management PDF

Running Head: AIRLINE REVENUE MANAGEMENT
AIRLINE REVENUE MANAGEMENT
Name of the Student
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1AIRLINE REVENUE MANAGEMENT
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Background of Company and its Current Situation...............................................................2
Cost and Revenue Performance of Airline.............................................................................4
Financial Performance of Airline...........................................................................................6
Conclusion..................................................................................................................................7
Reference....................................................................................................................................9

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Introduction
In airline industry, the revenue management is significant tool for validating overall
strategy of airline. This concept is extremely important within airline industry because it
allows the airline for anticipating the demand and optimizing pricing and availability for
achieving best possible financial results (Grauberger and Kimms 2016). Hence, this report
aims to discuss background of Volaris airline, its current and past situations, its business
model and Pestel analysis. Further, cost and revenue of airline will be analyzed followed by
financial performance of the airline. Lastly, conclusion will be given based on critical points.
Discussion
Background of Company and its Current Situation
Volaris was founded in Mexico in year 2005. Televisa and TACA airlines were
among the initial shareholders. After its agreement with Southwest Airlines in 2009, Volaris
started flying from the Mexico to the airports in USA. In 2010, when Mexicana de Aviacion
has stopped flying, Volaris took over its slot. In 2013, agreement between Volaris and
Southwest stopped and later in 2016, Volaris became second largest airline in the Mexico
after Aeromexico. After more than twelve years, this airline is having 187 routes to the 69
different destinations in addition to 50 frontier codeshare destinations (Lin et al. 2018).
Currently, Volaris is largest ultra-lower cost airline in the Latin America and largest domestic
passenger operator in Mexican market. This airline is having family fleet of Airbus A320 of
77 aircraft with the average of around 185 seats that is youngest fleet in the Mexico and most
likely the youngest in continent that is 4.6 years old (S21.q4cdn.com. 2020).
Business Model
The business model of Volaris includes being lower cost airline and offering the
convenient time of the travel to the families, friends and the leisure travelers to the key

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destinations. In addition, its business model is “point to point” flights compared to “hub and
spoke”. The consistent execution of Volaris of its ULCC business model is well-positioned
for the growth.
Figure: Long-Term Unit Cost Advantage
PESTLE analysis
Political
Volaris airline is operating in different countries and hence, is exposed to various
kinds of political system and political environment risk. In order to achieve success in the
dynamic industry of aviation, the company are required for diversifying systematic risk of the
aviation industry.
Economical