AIRLINE SEAT INVENTORY MANAGEMENT SYSTEM

Airline companies are confronted with a competitive operating environment that has been created by a combination of industry deregulation and economic malaise. As a means of restoring financial health, airline companies have, through the manipulation of computerized reservations systems, implemented seat inventory management systems based upon the yield management concept. While the various manifestations of seat inventory management systems have often proved to be financially beneficial to airline companies, their operation has also generated challenges to their legality by government, charges of unfairness by consumer advocacy groups, and effective countermeasures by air travelers. The problem investigated by this study was an assessment of the desirability of retaining seat inventory management systems based on the yield management concept in the face of opposition from both government and consumers.

This assessment was based on a survey of a sample of airline executives, government regulatory officials, and consumer advocates. The survey measured the perceptions of airline executives with respect to the effectiveness of yield managementbased seat inventory management systems; government regulatory officials with respect to the likely impact of governmental challenges to these systems; and consumer advocates with respect to the implications for airline profitability of consumer opposition to the sy

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ich regulation of the industry had denied to them, (2) underprice the smaller airlines operating in the markets, (3) drive the smaller airlines out of the industry, and (4) eventually raise prices in the mediumhaul markets. A fear was also expressed that deregulation would ultimately result in (1) an oligopolistic airline industry in the United States, which (2) would be far less competitive than the industry which existed in the mid1970s (Thayer, 1983, pp. 359363). Airline industry executives opposing deregulation lauded the CAB for creating a cohesive and an effective national air transportation system, and urged the board to retain the system in its existing form. The CAB proceeded to deregulate the airline industry, however, in spite of industry protests to the contrary. In the first full year following deregulation, several carriers eagerly sought and obtained new routes. During this same time period, the worst economic recession since the depression of the 1930s hit the country. Whether as a result of deregulation, the severe recession, or of a combination of the two, the airline industry suffered grievously, and that suffering has largely persisted into the 1990s. By the end of the second full year of deregul
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Approximate Word count = 8640
Approximate Pages = 35 (250 words per page)