Airline revenue management: A simulation of dynamic capacity management

In this paper, an event–driven stochastic simulation model mirroring a real world's revenue management system is presented. Its primary purpose is to evaluate revenue impacts of a continuously adjusted fleet assignment during the booking period. To account for realistic consumer behaviour, a demand model allowing for dependencies between booking classes is developed for the simulation. The simulation set–up and its major components as well as the input parameters are described. Then, computational results are displayed including sensitivity analyses concerning input parameters. Finally, future directions for the study of flexible capacity allocation will be given.