Airline revenue management (ARM) is one of emerging topics in transportation
logistics areas. This paper discusses a problem in ARM which is dynamic pricing for two parallel
flights owned by the same airline. We extended the existing model on Joint Pricing Model for
Parallel Flights under passenger choice behavior in the literature. We generalized the model to
consider multiple full-fare class instead of only single full-fare class. Consequently, we have to
define the seat allocation for each fare class beforehand. We have combined the joint pricing
model and the model of nested Expected Marginal Seat Revenue (EMSR) model. To solve this
hybrid model, we have developed a dynamic programming-based algorithm. We also have
conducted numerical experiments to show the behavior of our model. Our experiment results
have showed that the expected revenue of both flights significantly induced by the proportion of
the time flexible passengers and the number of allocated seat in each full-fare class. As
managerial insights, our model has proved that there is a closed relationship between demand
management, which is represented by the price of each fare class, and total expected revenue
considering the passenger choice behavior.

Creator(s)

• AHMAD RUSDIANSYAH
• DIRA MARIANA
• HILMAN PRADANA
• NANING A. WESSIANI

Contributor(s)

-

Publisher

Universitas Kristen Petra; 2010

Language

English

Category

jou – Journal

Sub Category

-

Source

Jurnal Teknik Industri, Vol. 12, No. 1, Juni 2010, 9-16; Ahmad Rusdiansyah (NA00404203), Dira Mariana (NA00404204), Hilman Pradana (NA00404205), Naning A. Wessiani (NA00404206)

Subject(s)

• REVENUE
• AIRLINES-MANAGEMENT

File(s)

• jiunkpe-ns-jou-2010-na00404203-23731-dynamic_pricing-resource1.pdf