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Creative service design for airline's extra revenue

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  • Young Dae Ko
  • Byung Duk Song

Abstract

This paper proposes a new service design using variable opaque products to generate additional revenue for airlines. Variable opaque products involve the products, which have a level of uncertainty about several features of the products that can be controlled by the product providers. Despite careful yield management, unsold seats remain for many flight-legs. It is suggested that these seats could be sold by offering seats to unknown or opaque destinations at a low price. Therefore, a new service can create a completely new recreational market while potentially minimizing demand downturn in existing markets. The overall procedure to apply this new service is described using quantitative methodologies that are tested to verify that no mathematical and logical errors exist.

Suggested Citation

  • Young Dae Ko & Byung Duk Song, 2020. "Creative service design for airline's extra revenue," Current Issues in Tourism, Taylor & Francis Journals, vol. 23(20), pages 2585-2601, October.
    • Handle: RePEc:taf:rcitxx:v:23:y:2020:i:20:p:2585-2601
    DOI: 10.1080/13683500.2019.1661980
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    Cited by:

    1. Letiche, Hugo & De Loo, Ivo & Lowe, Alan & Yates, David, 2023. "Meeting the research(er) and the researched halfway," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 94(C).
    2. Ben Li & Xiaolong Guo & Liang Liang, 2024. "Optimal pricing decision and capacity allocation of opaque selling in airline revenue management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(4), pages 356-368, August.
    3. Alonso, Juana M. & Socorro, M. Pilar, 2024. "Blind booking: The effects on passengers' purchase decision, airlines’ profitability, and tourist destinations," Research in Transportation Economics, Elsevier, vol. 105(C).

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