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Revenue Management and Exchange Rates Fluctuations: A Simulation Based on Air Tahiti Nui Experience

Author

Listed:
  • Jean Michel Chapuis

    (EIREST - Équipe interdisciplinaire de recherches sur le tourisme - UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Mathieu Bechonnet

Abstract

Fare classes may contain prices in different currencies for an international airline. This paper questions whether booking controls are sensitive to exchange rate movements. The analysis illustrates that a stronger national currency results in the closing of foreign points of sale earlier due to a direct effect on the value of foreign fares and an indirect effect on bid prices. Bid prices, as an average of national and foreign fares, are decreasing when the home currency strengthens against a foreign currency. The experience of Air Tahiti Nui shows that Revenue Managers carefully monitor exchange rate when fluctuations are more than the relative spread between the mean fare of consecutive fare classes.

Suggested Citation

  • Jean Michel Chapuis & Mathieu Bechonnet, 2009. "Revenue Management and Exchange Rates Fluctuations: A Simulation Based on Air Tahiti Nui Experience," Post-Print hal-00693994, HAL.
    • Handle: RePEc:hal:journl:hal-00693994
    DOI: 10.1057/rpm.2009.16
    as

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