Akademik Veri Yönetim Sistemi
The 22nd Conference of the International Federation of Operational Research Societies (IFORS 2021), , Seoul, Güney Kore, 23 Ağustos 2021 - 27 Eylül 2022, ss.35
Overall Airline Revenue Model with Customer Choice
Behavior for a Single Flight Leg
Muzaffer Buyruk, Ertan Güner
After applying reservation limits to seat inventories and determining
the number of seats for each fare class to optimize revenue gains, airlines have increased their revenues with ancillary products. Ancillary
revenues were estimated to rise from 22,6 billion dollars in 2010 to
109,5 billion dollars in 2019 (IdeaWorksCompany, 2018, 2019). In
this study, we offer an overall airline model with a customer choice
behavior by extending the fare-locking option model in the literature
and incorporating the other ancillary revenue products.
We make three general research contributions to the literature. Firstly,
to the best of our knowledge, a customer choice behavior model where
the subset of fare products is selected in the presence of a fare-locking
option over a single-flight leg has not been studied previously in the literature. Secondly, for the first time, we extend the fare-locking model
to include the other ancillary products. Third, our study proposes linear programming approximations to determine the upper bound of an
intractable dynamic program.
Our work, first, introduces a dynamic programming model to identify
the optimal sets and find the optimal expected revenue. Secondly, because the dynamic model, which also keeps a record of the fare-locking
reservations, is intractable due to the high-dimensional state variable,
we develop a deterministic linear programming model that gives the
upper bound of the dynamic program. Lastly, we conduct numerical
analyses.