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  • Optimal prices for multiple...
    Juhasz, Bertalan

    Journal of revenue and pricing management, 10/2021, Letnik: 20, Številka: 5
    Journal Article

    With IATA's New Distribution Capability (NDC), booking classes and fares filed into Global Distribution Systems will no longer be necessary, and the task of airline revenue management (RM) will shift from optimizing the availability of fares to generate optimal offered prices for each seat product (restricted, semi-flexible, flexible, …) which the airline sells. We will show how the marginal revenue transformation theory can be extended into the classless RM environment and introduce a network optimization algorithm based on this. The optimizer takes the forecasted price–demand curve of each origin–destination (OD) product as input and uses dynamic programming to calculate a bid price vector on each leg, which is in turn used to calculate the offered prices for each OD product. We will also discuss how the new method could be used in practice by an airline RM department to provide predictable and self-consistent prices.