Institute of Transportation, MOTC

The growth of airline transportation has a huge impact on economic around the world, as well as participating as an important role in the transportation field. From the aspect of an airline company, the course of inventory control of its capacity is important for its revenue management. Since the capacity of an aircraft cannot be changed nor stored, how to efficiently allocate the limited sources then became the main course of airline companies. Flight seats has the possibility of market segmentation, except for the cabin class segmentation, e.g., first class and economic class, there is also fare class segmentation which different fares come with different restrictions, provided for the customers to choose by their preferences. Hence, how to properly make the decision to sell the right ticket at the right price to the right customer is the core of revenue management.
In this study, with the capacity remains unchanged, we will discuss about how to make the best decision. We formed a two-stage stochastic program (SP) considering customers’ choice behavior, by using the technique of re-solving to approximate the result of dynamic programming (DP).
After model formulation, we will perform some numerical experiments to compare the effect of different control policy by DP, SP and first-come-first-serve (FCFS). For the re-solving, we will solve by one, two and four times, finding the value of re-solving.