Price Discrimination
Customers pay different prices to receive essentially the same service
Low fares offered to price sensitive market segments can stimulate demand to fill capacity which might otherwise go unused
To avoid revenue dilution, price insensitive segments must be prevented from being able to utilize discounted fares. This is accomplished through fare restrictions and discount allocation.
Belobaba’s [1987] “EMSR” rule focuses on the price discrimination aspect of revenue management for a single flight leg. It allocates capacity among different fare classes by setting equal the expected marginal revenue of each fare class on each leg.