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

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  • Tomasz Drabas

    (UNSW Sydney)

  • Cheng-Lung Wu

    (UNSW Sydney)

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%.

Suggested Citation

  • Tomasz Drabas & Cheng-Lung Wu, 2020. "A market spill–recapture unconstraining model for estimating airline true demand," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(1), pages 43-60, February.
    • Handle: RePEc:pal:jorapm:v:19:y:2020:i:1:d:10.1057_s41272-018-00178-y
    DOI: 10.1057/s41272-018-00178-y
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    References listed on IDEAS

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    4. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, September.
    5. Gustavo Vulcano & Garrett van Ryzin & Wassim Chaar, 2010. "OM Practice--Choice-Based Revenue Management: An Empirical Study of Estimation and Optimization," Manufacturing & Service Operations Management, INFORMS, vol. 12(3), pages 371-392, February.
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