A market spill–recapture unconstraining model for estimating airline true demand

Tomasz Drabas () and Cheng-Lung Wu ()
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Tomasz Drabas: UNSW Sydney
Cheng-Lung Wu: UNSW Sydney

Journal of Revenue and Pricing Management, 2020, vol. 19, issue 1, No 6, 43-60

Abstract: Abstract The true demand of airline tickets is defined as the number of passengers that would book a particular flight if there was no capacity constraint. Estimating the true demand plays a crucial role in airline revenue management and pricing. In this paper, we developed a true demand unconstraining model that incorporated passenger choice models, allowing us to simultaneously estimate true demand for all booking classes in a market. Simulated booking data were generated to inform the true demand that is unavailable in the real-world setting. Numerical experiments showed that our model could outperform a benchmarking model by up to 10%.

Keywords: Demand unconstraining model; True demand; Demand spill; Demand recapture; Cross-nested logit model; Multinomial logit model (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1057/s41272-018-00178-y

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