Modeling revenue yield of reservation systems that use nested capacity protection strategies

Laila Haerian, Tito Homem-de-Mello, Clark A. Mount-Campbell

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

Airline reservation systems involve the use of booking policies to implement a predetermined allocation of seats to different fare classes. Models for optimal allocation of seats typically assume one of two commonly used booking policies, often without recognizing the differences between them. In this paper, we present alternative representations of these booking policies, and demonstrate that even with identical seat allocations the two booking policies may result in different expected revenues. We also show conditions under which one of the policies is better. Our Markov chain models facilitate optimization of seat allocations given either booking policy. Examples are given.

Original languageEnglish
Pages (from-to)340-353
Number of pages14
JournalInternational Journal of Production Economics
Volume104
Issue number2
DOIs
StatePublished - Dec 2006
Externally publishedYes

Keywords

  • Airline revenue management
  • Booking policies
  • Markov chains
  • Seat inventory control

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