Flying high - University mathematician helps airline set ticket prices

The low-cost airline bmi has enlisted the help of a University of Southampton PhD student to investigate the best way to price airline tickets.

Honora Smith undertook the three-month project as part of her Masters degree in Operational Research within the School of Mathematics.

The placement centred around the airline industry's increasing policy of selling tickets on a one-way basis rather than as a paired return, a development which has revolutionised the European short-haul flight market and rendered obsolete old fare-based rules and restrictions such as a Saturday night stay requirement. As many tickets are now sold through the Internet, customers have ready access to up-to-date market prices and can adapt to any pricing changes introduced by competitors.

Honora used mathematical techniques to explore ways of learning more about links between an airline's current fare, the competitor's fare and the revenue obtained for pricing decisions by the airline. Although the project mainly involved the manipulation of data, she also visited the bmi Head Office in Castle Donington, Derby.

Revenue Management and Pricing Manager at bmi, Suzanne Donnelly, commented: "The main dissertation is impressive and is accompanied by a working model to identify revenue opportunities. This is of practical value to bmi as it will aid with decision-making on pricing availability controls."

University of Southampton Industrial Liaison Manager Dr Ian Rowley said, "Our Management and Maths students bring a fresh pair of eyes and the latest techniques into host organisations during the three month placements. Projects can include increasing efficiency, reducing costs, developing strategy, managing demand or improving standards of service."