Airline Revenue Management: Optimization Using Origin-Destination Strategy Controlled by Nested Heuristics

Abstract:

Effective revenue management practice can be the single most important factor in distinguishing between success and failure of an airline and spell the difference between profitability and loss for a particular flight. This paper deals with usage of Deterministic Linear Program to optimize the network as a whole and uses LINGO to solve the DLP as it has 120 variables and 127 constraints and is impossible to solve manually. Optimization strategies taken into consideration are: Leg Based Expected Margins, Seat Revenue (EMSR), and Deterministic Linear Program (DLP). In the seat inventory control process Nested Heuristics is used for an improved and accurate result.

• Periodical: Applied Mechanics and Materials (Volumes 229-231)
• Pages: 2775-2778
• DOI: https://doi.org/10.4028/www.scientific.net/AMM.229-231.2775
• Online since: November 2012
• Authors: Ajyuk J. Raj, Ganesh Kumar Nithyanandam, S. Jayaraj
• Keywords: Airline, Nested Heuristics, Optimization, Revenue Management

References

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[2] Ajyuk J. Raj, Manu Joseph and Rajeesh V. R. Airline Revenue Management-An Application in Passenger Industry, Project Report, College of Engineering Trivandrum, (2008).

[3] Peter P. Belobaba, Air Travel Demand and Airline Seat Inventory Management, Report FTL-R87-8, Flight Transportation Laboratory, Massachusetts Institute of Technology, Cambridge, (1987).

[4] Elizabeth L. Williamson, Comparison of Optimization Techniques for Origin-Destination Seat Inventory Control, Massachusetts Institute of Technology, Cambridge, (1986).