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An implementable optimization of airfare structure

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  • Brian So

    (Princeton University)

Abstract

Pricing and especially fare structures have received little attention within the revenue management literature. For an airline, well-designed fare structures segment customers properly, selling to correct customers at intended prices. For a given origin and destination, the pricing manager seeks to maximize revenue by jointly optimizing all price levels in the airline’s menu of fares. Deterministic demand is modeled using booking periods as primary customer segments; inventory management is integrated as a secondary segmentation tool. Analytical solutions are attained under various demand functional forms, and comparative statics are juxtaposed to reveal characteristics of each demand type.

Suggested Citation

  • Brian So, 2017. "An implementable optimization of airfare structure," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(5), pages 441-465, October.
    • Handle: RePEc:pal:jorapm:v:16:y:2017:i:5:d:10.1057_s41272-017-0081-5
    DOI: 10.1057/s41272-017-0081-5
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    References listed on IDEAS

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    Cited by:

    1. Aparna Jayaram & R. K. Amit & Amit Agarwal & Xiaodong Luo, 2024. "Elasticity-integrated pricing and allocation heuristic for airline revenue management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(4), pages 305-317, August.
    2. Miju Ahn & Xiaodong Luo & Sergey Shebalov, 2020. "Variable pricing: an integrated airline pricing and revenue management model," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 421-435, December.

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