Revenue Analyst
Latam Airlines Group

Santiago, Chile    Job

Challenge Brief

You’ve been recently hired to work at LATAM Airlines and your duty is to set prices for the route flying between cities AAA and BBB, which solely has an Economy cabin equipped on their planes.

This route is much concurred mainly for 2 reasons: there´s corporate traffic that travels between both cities for business and there´s also tourists that use both destinies as a connection point to go on vacations to different places worldwide.

Currently, prices are set seat by seat as it follows:
• The price of the first seat to be sold is a fixed amount.
• The price of the following seat to be sold is a certain percentage more expensive than the one before, and so on.

Nowadays, it has become difficult to sell these flights completely; they´ve been achieving a 50% mean load factor. Certain studies made by a consultancy group unveiled that corporate passengers have been buying low price seats. Tourist passengers, on the other hand, unhappy and unwilling to pay this extra percentage to fly on the next seat available, simply choose not to fly with LATAM.

What should the applicant resolve?

What would you do to solve this problem? Is it possible to capture all of the corporate and tourist demand? How would you set prices in order to achieve your proposal?

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