An Optimal Airline Revenue Management Seat Pricing Plan Model

Abstract

The goal of an airline is to sell tickets at the highest fare possible, thus yielding maximum profit for the stakeholders. As airline seat pricing is divided into different fare classes, a revenue management system is created and maintained to identify opportunity costs where the airline may sell an optimum number of available seats in both discounted fare and full fare classes. Ideally, under perfect conditions, the airline will sell all available seats at full capacity for each leg of a trip. Under non-ideal conditions for the airline, not all available seats may sell at either full fare or discounted fare prices, thus resulting in potential revenue loses. This study will present an optimal model of an airline revenue management seat pricing plan to maximize revenue for each leg of a trip. The recommended discounted fare and full fare seats in the economy class will be calculated under a desired optimal full capacity seating plan.

Authors

• Koursaris, Constantine M Embry-Riddle Aeronautical University
• Marion, James W, Jr. Embry-Riddle Aeronautical University

Keywords

• Revenue Management
• Optimal Airline Seat Price
• Linear Programming
• Reservation
• Business Administration, Management, and Operations
• Business Analytics
• Industrial Engineering
• Management Sciences and Quantitative Methods
• Operational Research
• Operations and Supply Chain Management