Management Science

Analysis of a Joint Pricing and Seat Allocation Model in a Hub-to-Hub Airline Network

Expand

Online published: 2016-09-30

Abstract

In airline revenue management, after differentiating products on each itinerary according to various restrictions, management needs to set the prices for the products. A deterministic joint pricing and seat allocation model is proposed. It is reduced to a separable concave programming problem and thus readily solvable. Focusing on a special hub-to-hub airline network, monotonicity of the pricing decisions is explored. Using a nonlinear primal–dual technique, it is shown that some itineraries’ optimal prices are decreasing, while some other itineraries’ optimal prices are increasing with a capacity change in either a side leg or the middle leg. Such structural properties add important managerial insights into the pricing model for revenue managers in an airline company.

Cite this article

Hong-Zhi He . Analysis of a Joint Pricing and Seat Allocation Model in a Hub-to-Hub Airline Network[J]. Journal of the Operations Research Society of China, 2016 , 4(3) : 309 . DOI: 10.1007/s40305-016-0121-7

Options
Outlines

/