Revenue Management Theory In Railway Passenger Transportation's Application Discussion

Revenue management concept has been widely applied in the airline industry home and abroad. It has been even taken into unprecedented consideration in the hotel industry whilst it has never been applied in the railway passenger transportation. In China, the railway passenger transportation management is lagging behind the airline and hotel industries, playing second to that of the developed countries abroad. Therefore, there is a must to introduce advanced passenger transportation management method with a view to setting the railway passenger transportation of China apart from its competitors. The advanced management method is boiled down to revenue management. By means of revenue management, we can greatly enhance the management level of railway passenger transportation, promote the yields and market shares of railway passenger transportation and decrease the resources-wasting arising from the booth vacancy.The paper first analyzes the current landscape of the railway passenger transportation in China, explains the research background and purpose of the paper and then highlights the importance of the application of revenue management in the railway passenger transportation. Starting from the origin, development and outlook of revenue management, the paper then introduces the concept of revenue management and sets out methods to realize revenue management, that is to maximize the revenue via market segmentation policy, price level policy and inventory allocation policy. It illustrates the achievement accomplished by the airline and hotel industries and Amtrak after the revenue management has been applied, manifesting the effective role played by revenue management theory in relevant industry management.The paper then comes up with the market segmentation and pricing policies of railway passenger transportation, making description of the definition, purpose and foundation of market segmentation and leading to the definition and categories of price discrimination. On the basis of these, it defines the price differentiation. Meanwhile, it explains the application scope of the railway market segmentation and price differentiation as well as its principles and ways to achieve that purpose via quoting two typical examples on foreign soils.The paper then sets out the research on application of revenue management, describing the conditions on which the revenue management is applied to the operation of railway seats and three ways to optimize train seats. The three ways are price differentiation, passenger flow control and group management. It then introduces several key models of revenue management, namely basic model of seat control, tender price method of network transportation and potential price (EMSR method). It makes improvement upon the tender price method, forms SLP model on which the algorithm of three stations is presented.At last, the paper analyzes hindrances of implementing revenue management in the railway passenger transportation as well as the solutions, setting out the vision and the prospects of the research work..