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- Title
Airline network revenue management by multistage stochastic programming.
- Authors
Möller, Andris; Römisch, Werner; Weber, Klaus
- Abstract
A multistage stochastic programming approach to airline network revenue management is presented. The objective is to determine seat protection levels for all itineraries, fare classes, points of sale of the airline network and all dcps of the booking horizon such that the expected revenue is maximized. While the passenger demand and cancelation rate processes are the stochastic inputs of the model, the stochastic protection level process represents its output and allows to control the booking process. The stochastic passenger demand and cancelation rate processes are approximated by a finite number of tree structured scenarios. The scenario tree is generated from historical data using a stability-based recursive scenario reduction scheme. Numerical results for a small hub-and-spoke network are reported.
- Subjects
STOCHASTIC programming; REVENUE management; AIRPLANE seats; INVENTORY control; AIRLINE management software
- Publication
Computational Management Science, 2008, Vol 5, Issue 4, p355
- ISSN
1619-697X
- Publication type
Article
- DOI
10.1007/s10287-007-0058-8