Optimal prices for multiple products in classless revenue management

Bertalan Juhasz ()
Additional contact information
Bertalan Juhasz: Finnair Oyj

Journal of Revenue and Pricing Management, 2021, vol. 20, issue 5, No 7, 588-595

Abstract: Abstract With IATA's New Distribution Capability (NDC), booking classes and fares filed into Global Distribution Systems will no longer be necessary, and the task of airline revenue management (RM) will shift from optimizing the availability of fares to generate optimal offered prices for each seat product (restricted, semi-flexible, flexible, …) which the airline sells. We will show how the marginal revenue transformation theory can be extended into the classless RM environment and introduce a network optimization algorithm based on this. The optimizer takes the forecasted price–demand curve of each origin–destination (OD) product as input and uses dynamic programming to calculate a bid price vector on each leg, which is in turn used to calculate the offered prices for each OD product. We will also discuss how the new method could be used in practice by an airline RM department to provide predictable and self-consistent prices.

Keywords: Airline revenue management; Continuous pricing; New distribution capability; Marginal revenue transformation; Bid price (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1057/s41272-021-00282-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorapm:v:20:y:2021:i:5:d:10.1057_s41272-021-00282-6

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41272

DOI: 10.1057/s41272-021-00282-6

Access Statistics for this article

Journal of Revenue and Pricing Management is currently edited by Ian Yeoman

More articles in Journal of Revenue and Pricing Management from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().