Abstract:

In this paper, the structural properties of revenue management in a hubto-
hub airline network is studied. Using a reformulated network flow version of the
problem, it is shown that the optimal value has supermodularity, submodularity, and
L concavity in the network’s capacities dimensions. It is thus deduced that the certainty
equivalent control thresholds used in the revenue management problem have
monotone properties. These structural properties add important managerial insights
into the network revenue management system.

Key words: Revenue management ·, Hub-to-hub network ·, Certainty equivalent
control ·, Super/submodularity ·, L concavity ·, Monotone thresholds