Revenue Management and Pricing Optimization for Domestic Airlines Operating Out of Murtala Muhammed Airport

Revenue management has transformed the profitability of airline operations globally, yet its analytical application within Nigerian domestic aviation remains limited compared to established aviation markets. This study develops a revenue management and pricing optimization framework for domestic airlines operating from Murtala Muhammed Airport, Lagos, South West Nigeria, applying seat inventory control models and dynamic pricing theory. Booking data for a 12-month period covering six domestic routes are obtained from a participating Nigerian carrier, including booking class demand by departure date, cabin, and booking lead time. Expected marginal seat revenue (EMSR) models are fitted to characterize demand across booking classes, and optimal seat protection levels are derived for each booking class on each route. Dynamic pricing models are calibrated to optimize fare-class availability adjustments in response to booking pace relative to historical norms. The optimized revenue management system is simulated on historical booking data and compared against the carrier's actual revenue outcomes. Results indicate that implementing the proposed seat inventory control policy increases simulated total revenue by an average of 11.3 percent across six routes, with the highest gains on routes exhibiting the greatest demand variability. Displacement cost analysis identifies conditions under which low-fare demand should be rejected to preserve capacity for higher-fare late bookings. Recommendations include phased implementation of an automated revenue management system and investment in demand forecasting capability. Keywords: revenue management, airline pricing, seat inventory, Lagos, dynamic pricing