Journal of the Operational Research Society

, Volume 55, Issue 5, pp 535–541

Maximizing revenue in the airline industry under one-way pricing

Practice Note
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Abstract

The paper describes a methodology that has been implemented in a major British airline to find the optimal price to charge for airline tickets under one-way pricing. An analytical model has been developed to describe the buying behaviour of customers for flights over the selling period. Using this model and a standard analytical method for constrained optimization, we can find an expression for the optimal price structure for a flight. The expected number of bookings made on each day of the selling period and in each fare class given these prices can then be easily calculated. A simulation model is used to find the confidence ranges on the numbers of bookings and these ranges can be used to regulate the sale of tickets. A procedure to update the price structure based on the remaining capacity has also been developed.

Keywords

air transport revenue management simulation yield management 

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Copyright information

© Palgrave Macmillan Ltd 2004

Authors and Affiliations

  1. 1.University of SouthamptonSouthamptonUK

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