Models of the spiral-down effect in revenue management

William L. Cooper, Tito Homem-de-Mello, Anton J. Kleywegt

Producción científica: Contribución a una revistaArtículorevisión exhaustiva

126 Citas (Scopus)

Resumen

The spiral-down effect occurs when incorrect assumptions about customer behavior cause high-fare ticket sales, protection levels, and revenues to systematically decrease over time. If an airline decides how many seats to protect for sale at a high fare based on past high-fare sales, while neglecting to account for the fact that availability of low-fare tickets will reduce high-fare sales, then high-fare sales will decrease, resulting in lower future estimates of high-fare demand. This subsequently yields lower protection levels for high-fare tickets, greater availability of low-fare tickets, and even lower high-fare ticket sales. The pattern continues, resulting in a so-called spiral down. We develop a mathematical framework to analyze the process by which airlines forecast demand and optimize booking controls over a sequence of flights. Within the framework, we give conditions under which spiral down occurs.

Idioma originalInglés
Páginas (desde-hasta)968-987
Número de páginas20
PublicaciónOperations Research
Volumen54
N.º5
DOI
EstadoPublicada - sep. 2006
Publicado de forma externa

Huella

Profundice en los temas de investigación de 'Models of the spiral-down effect in revenue management'. En conjunto forman una huella única.

Citar esto