Designing and Pricing Services Based on Customer‐Perceived
                    Value: An Airline Company Feasibility Study

Designing and Pricing Services Based on Customer‐Perceived Value: An Airline Company Feasibility Study

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Article ID: iaor201330
Volume: 4
Issue: 4
Start Page Number: 320
End Page Number: 330
Publication Date: Dec 2012
Journal: Service Science
Authors: , ,
Keywords: pricing
Abstract:

We propose a new integrated model for pricing airline tickets that takes into account the perceived value of multiple services associated with a given flight. For instance, clients perceive benefits on different attributes such as refund options, baggage allowances, time slots, days of operations, Web check‐in services, as well as airline brand. These elements of perceived values are not, to our knowledge, modeled in existing yield management systems. Our integrated model includes a classical aggregate planner for services as well as a share of choice. In this paper, we have worked closely with an airline company and provided it with relevant managerial recommendations.

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