A fluid approximation for the single-leg fare allocation problem with nonhomogeneous poisson demand
Küçük Resim Yok
Tarih
2022
Dergi Başlığı
Dergi ISSN
Cilt Başlığı
Yayıncı
Palgrave Macmillan Ltd
Erişim Hakkı
info:eu-repo/semantics/closedAccess
Özet
Fare allocation for legs and O&D pairs plays a crucial role in airline revenue management. Despite a large number of dynamic pricing studies, there are only a few widely adopted studies in which assumptions affect most tactical decisions with potentially large impacts on airline profitability. These decisions involve approximating future pricing schemes, allocation of fare classes, and setting booking limits. We propose a fare allocation model for a single leg in the presence of a realistic nonhomogeneous Poisson demand with an increasing rate. We aim to compute when and how to markup the price for an airfare product (switch to an upper fare class) to maximize the expected revenue. We study a fluid approximation of the underlying stochastic problem considering independent demand from each customer segment and examine different properties that lead to several important insights. Finally, we propose a dynamic look-ahead pricing scheme to compare our fluid approximation results against the well-known EMSRb heuristic and a dynamic programming solution on randomly generated booking request data. Numerical examples illustrate the effectiveness of our proposed approach.
Açıklama
Anahtar Kelimeler
Revenue Management, Airline Operations, Inventory Allocation, Nonhomogeneous Poisson Process
Kaynak
Journal of Revenue And Pricing Management
WoS Q Değeri
N/A
Scopus Q Değeri
Q2
Cilt
21
Sayı
1
