Article ID: | iaor20105184 |
Volume: | 12 |
Issue: | 3 |
Start Page Number: | 371 |
End Page Number: | 392 |
Publication Date: | Jun 2010 |
Journal: | Manufacturing & Service Operations Management |
Authors: | Vulcano Gustavo, van Ryzin Garrett, Chaar Wassim |
Keywords: | yield management |
Discrete choice models are appealing for airline revenue management (RM) because they offer a means to profitably exploit preferences for attributes such as time of day, routing, brand, and price. They are also good at modeling demand for unrestricted fare class structures, which are widespread throughout the industry. However, there is little empirical research on the practicality and effectiveness of choice-based RM models. Toward this end, we report the results of a study of choice-based RM conducted with a major U.S. airline. Our study had two main objectives: (1) to assess the extent to which choice models can be estimated well using readily available airline data, and (2) to gauge the potential impact that choice-based RM could have on a sample of test markets.