Seat assignment recommendation in airlines purchase flow to increase ancillary revenue considering weight and balance constraints

Pardo González, Germán, Alejandra Tabares Pozos, Camilo Quiroga and à lvarez-Martínez, David

Journal of Air Transport Management, 2024, vol. 117, issue C

Abstract: In the highly competitive and cost-sensitive realm of low-cost carriers, ancillary services have emerged as a pivotal revenue source, supplementing the basic fare with optional extras that enhance the passenger experience. This research propels this concept forward by introducing a sophisticated Mixed Integer Linear Programming (MILP) model specifically designed to optimise revenue from seat change fees, a key ancillary service. Our model is particularly crucial for low-cost carriers, where the natural decomposition of pricing strategies allows passengers to pay for a basic service, with the option to enhance their flying experience through additional paid services. The model introduces a novel approach to encourage seat changes, particularly for passengers booked together under the same reservation. The core strategy to promote seat changes involves maximising the seating distance between passengers who opt for the automatic seat selection feature, based on the current aircraft configuration. By intentionally allocating these passengers the furthest seats apart, the model creates a natural incentive for them to pay for seat changes, aiming to sit closer together. This approach not only generates additional revenue through seat change fees but also optimises the utilization of seat inventory by encouraging the purchase of premium seat options. To address the inherent unpredictability of seat sales, the model strategically reserves premium seats and places passengers less inclined towards seat changes in less desirable locations. This ensures an optimised allocation of seats that maximises revenue potential. Incorporating computational acceleration techniques, the model is designed for real-time application, allowing airlines to dynamically adapt to booking changes and maximise ancillary revenue opportunities. This rapid response capability empowers airlines to adapt swiftly to changing dynamics in seat bookings, thereby maximising their revenue generation potential. By offering a sophisticated tool for increasing profits from passenger accommodation services, this research bridges an essential gap in existing airline industry strategies, proposing a transformative approach to ancillary service optimisation.

Keywords: Network flows optimisation; Integer programming; OR in airlines; Multi-criteria optimisation; Seat assignment (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:117:y:2024:i:c:s0969699724000474

DOI: 10.1016/j.jairtraman.2024.102582

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