Forecasting Is A Critical Function Of Revenue Management And Planning For Businesses

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Background Forecasting is a critical function of revenue management and strategical planning for businesses. With the help of historical information, forecasting allows businesses to anticipate changing market trends, predict product demand and manage the costs of inventory (Lambert, 2011). While forecasting has many applications and is utilized in numerous trades, this research focuses on forecasting within the airline industry. In this context, the emphasis is on forecasting to optimize profit, by anticipating demand and adjusting capacity needs and prices accordingly. There are many variables that need to be taken into consideration when forecasting in the airline business, such as deciding on the size of the fleet, choosing the…show more content…
This analysis will propose different alternatives to minimize forecasting errors, while reducing operational costs and maximizing profits. Solution#1: Utilizing a global distribution system (GDS) that provides accurate and real-time data could enable airlines to cut costs by planning and allocating resources more efficiently. A GDS is basically a reservation system that connects and collects data from airlines, hotels and other travel service reservation systems. One of such system is SABRE (Semi – Automatic Business Research Environment), which among the many functions is capable of calculating oil prices, the most efficient routes for flights, as well as estimating last minute available seating on flights, tourism trends, determining the best size of the aircraft to use for specific routes, and how much freight to put on a flight. The use of a system like SABRE could help reduce the costs of flying airplanes with empty seats, maximize cargo capacity on each flight, calculate and adjust pricing according to cost such as oil prices, reduce downtime and improve passenger satisfaction through more frequent on-time arrivals and departures. It could also improve the efficiency of maintenance operations by recording and transmitting data about performance issues while the aircraft is still in the air. By identifying the mechanical issues
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