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Trans. Planning Journal
| Title | An Airline Company’s Yield Management Dynamic Strategies Model |
|---|---|
| Author | Jao-Hong Cheng, Yu-Hern Chang |
| Summary | The quality of a seat allocation strategy affects airlines’ competitiveness directly. The decision of booking capacity has a great influence on the load factor and revenue of flight, and the competitiveness of airline companies. Therefore, how to construct the optimal seat allocation strategies are thus an important issue on revenue management. To help airlines make a best decision effectively, this research develops a model to achieve maximum revenue. This research constructs a new dynamic seat allocation strategy model from the perspective of space controllers. The model’s decision variables are the seat and its dynamic stages separated by every booking demand. The main contributions of this research are as follows: (1) It constructs multiple-fare expected marginal seat revenue function that can quickly decide the suitable allocation of single-seat or multiple-seat demand. (2) It also applies the concept of survival probabilities that considers cancellation and no-shows simultaneously. By the decision-tree analysis, the seat allocation will be reconsidered by survival probabilities, and then avoids a wrong allocation. Base on this concept, the highest fare of single-seat or multiple-seat demand can not always be accepted. Therefore, different fares’ demands compete with each other in dynamic stage. (3) An empirical study indicates that this research increases 27% revenue in comparison with Belobaba’s dynamic nested seat allocation strategy. |
| Vol. | 32 |
| No. | 4 |
| Page | 631 |
| Year | 2003 |
| Month | 12 |
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