Optimal pricing ladders for the sale of airline tickets

Pricing ladders are widely used in the airline industry to define the discrete set of prices that can be charged for seats on a flight. We consider the factors that affect the setting of these ladders for one–way economy tickets. The minimum and maximum fares are assumed to be fixed and we focus on maximising the revenue generated on a flight by changing the spacing of the intermediate fares. Three scenarios are considered for the market: single flight with perfect market segmentation and imperfect market segmentation and multiple flights on one route.