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Optimization models in RM systems: Optimality versus revenue gains

  • Peter P Belobaba
Practice Article

Abstract

Optimization models in airline revenue management (RM) systems have evolved from single flight leg to network revenue maximization to marginal revenue optimization for less restricted fare structures. This article reviews the most common optimization approaches that have been widely implemented in airline RM systems, with a focus on how the mismatch between model assumptions and reality can affect achievable revenue performance. Simulation findings from the Passenger Origin-Destination Simulator are used to illustrate how robustness and revenue gains, as opposed to theoretical optimality, have driven the widespread adoption of practical optimization models in RM systems.

Keywords

EMSR history revenue management PODS network optimization O-D control 

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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2016

Authors and Affiliations

  • Peter P Belobaba
    • 1
  1. 1.MIT International Center for Air TransportationCambridgeUSA

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