Maximizing revenue in the airline industry under one-way pricing


Anjos, M.F., Cheng, R.C.H. and Currie, C.S.M. (2004) Maximizing revenue in the airline industry under one-way pricing. Journal of the Operational Research Society, 55, (5), 535-541. (doi:10.1057/palgrave.jors.2601721).

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Description/Abstract

The paper describes a methodology that has been implemented in a major British airline to find the optimal price to charge for airline tickets under one-way pricing. An analytical model has been developed to describe the buying behaviour of customers for flights over the selling period. Using this model and a standard analytical method for constrained optimization, we can find an expression for the optimal price structure for a flight. The expected number of bookings made on each day of the selling period and in each fare class given these prices can then be easily calculated. A simulation model is used to find the confidence ranges on the numbers of bookings and these ranges can be used to regulate the sale of tickets. A procedure to update the price structure based on the remaining capacity has also been developed.

Item Type: Article
ISSNs: 0160-5682 (print)
Related URLs:
Keywords: air transport, revenue management, simulation, yield management
Subjects: H Social Sciences > HE Transportation and Communications
H Social Sciences > HB Economic Theory
Q Science > QA Mathematics
Divisions: University Structure - Pre August 2011 > School of Mathematics > Operational Research
ePrint ID: 29633
Date Deposited: 11 May 2006
Last Modified: 27 Mar 2014 18:18
URI: http://eprints.soton.ac.uk/id/eprint/29633

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