Dynamic pricing in airline seat management for flights with multiple flight legs

Dynamic pricing in airline seat management for flights with multiple flight legs

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Article ID: iaor2001830
Country: United States
Volume: 33
Issue: 2
Start Page Number: 192
End Page Number: 206
Publication Date: May 1999
Journal: Transportation Science
Authors:
Keywords: programming: dynamic, yield management
Abstract:

Consider a multiple booking class airline-seat inventory control problem that relates to either a single flight leg or to multiple flight legs. During the time before the flight, the airline may face the problems of (1) what are the suitable prices for the opened booking classes and (2) when to close those opened booking classes. This work deals with these two problems by only using the pricing policy. In this paper, a dynamic pricing model is developed in which the demand for tickets is modeled as a discrete time stochastic process. An important result of this work is that the strategy for the ticket booking policy can be reduced to sets of critical decision periods, which eliminates the need for large amounts of data storage.

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