Personalization in airline revenue management: an overview and future outlook


Buyruk M., GÜNER E.

JOURNAL OF REVENUE AND PRICING MANAGEMENT, vol.21, no.2, pp.129-139, 2022 (ESCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 21 Issue: 2
  • Publication Date: 2022
  • Doi Number: 10.1057/s41272-021-00342-x
  • Journal Name: JOURNAL OF REVENUE AND PRICING MANAGEMENT
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, ABI/INFORM, Business Source Elite, Business Source Premier, DIALNET
  • Page Numbers: pp.129-139
  • Keywords: Revenue management, Airline, Personalization, Dynamic pricing, Assortment optimization, BIG DATA, PRICE-DISCRIMINATION, SHARING ECONOMY, SEAT ALLOCATION, FARE STRUCTURES, CHOICE, MODEL, OVERBOOKING, STRATEGIES, PASSENGER
  • Gazi University Affiliated: Yes

Abstract

Airline revenue management (RM) concentrates on the optimization of the booking process to accept a reservation with three key decision-making pillar: the right conditions, the right time, and the right fare for a future flight. Historically, academics have developed overbooking, single-leg seat inventory, and origin-destination control as well as forecasting and dynamic pricing models intending to maximize airline revenues. Airlines have applied reservation limits to their seat inventories and tried to determine the number of seats for each fare class to increase their revenue gains. However, limitations on technology (e.g., distribution systems and access to passenger information) prevented airlines to generate customized offers to customers. Recent advances in technology, such as the International Air Transport Association's New Distribution Capability and data-driven technology trends present a strong potential for consumers to encounter specialized offers in the booking process. Therefore, this study aims to provide a survey for personalization in the airline RM. In operations research, personalization in airline RM has been studied in recent years with a growing emphasis on dynamic pricing models, and it is relatively a new area of research. For this reason, this study will cover a brief introduction to airline RM and conduct a systematic review of existing research for personalization. It will also suggest several possible directions for the future outlook.