A Static Model in Single Leg Flight Airline Revenue Management

J. B. G. Frenk (), Behrooz Pourghannad () and Semih O. Sezer ()
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J. B. G. Frenk: Faculty of Engineering and Natural Sciences, Sabancı University, 34956 Tuzla, Istanbul, Turkey
Behrooz Pourghannad: Department of Industrial and Systems Engineering, University of Minnesota, Minneapolis, Minnesota 55414
Semih O. Sezer: Faculty of Engineering and Natural Sciences, Sabancı University, 34956 Tuzla, Istanbul, Turkey

Transportation Science, 2017, vol. 51, issue 1, 214-232

Abstract: Static models on single leg airline revenue management generally consider booking limits or protection limits as the main decision variables to control reservation requests. In the current paper, we provide an alternative framework in which the decision variables are the closing times of fare classes. In a continuous time model with nonhomogeneous Poisson arrivals, cancellations, and no-shows, we study the problem of finding optimal closing times to maximize the expected net revenue from a given flight. We analyze the value function, point out some easy cases, and bring an easily implementable dynamic programming based solution method. We also illustrate this method on some numerical examples.

Keywords: airline revenue management; multidimensional optimization; Poisson random measures (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:51:y:2017:i:1:p:214-232

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