Article ID: | iaor20022083 |
Country: | United States |
Volume: | 31 |
Issue: | 2 |
Start Page Number: | 37 |
End Page Number: | 55 |
Publication Date: | Mar 2001 |
Journal: | Interfaces |
Authors: | Smith Barry C., Gnther Dirk P., Rao B. Venkateshwara, Ratliff Richard M. |
Keywords: | transportation: general, transportation: air, e-commerce |
Many e-commerce principles were pioneered in the airline industry. These include the first business-to-business electronic information exchange and industrywide electronic marketplace. This environment provided unprecedented opportunity for operations research modeling. By the mid-1980s airlines used customer shopping data to calibrate traveler-demand-and-choice models, analyzed multichannel product-distribution strategies with simulation, and practised dynamic pricing through yield management. Airlines continue to derive billions of dollars annually from these and derivative models. The availability of reliable, low-cost communications via the internet is providing new modeling challenges within the airline industry and is also providing similar opportunities in other industries.