Integrated Optimization Models for Airline Seat Pricing and Upgrading: Maximizing Profitability with Combined Cabin Capacities

This paper presents an innovative approach to optimize airline seat pricing and upgrading strategies, with a focus on maximizing profitability. Traditionally, revenue management optimization has prioritized premium cabin pricing, leaving economy cabin seat upgrading as a secondary consideration. In contrast, the proposed models take into account all cabin capacities, including business/first and economy, and optimize them simultaneously. The authors consider deterministic and random demand scenarios and conduct numerical tests using actual production data. The results demonstrate that the integrated optimization models outperform current industry practices. This paper contributes to the airline industry by offering an effective approach to pricing and upgrading that can significantly increase profitability.

• Record URL:
  https://annualmeeting.mytrb.org/OnlineProgram/Details/18484
• Supplemental Notes:
  • This paper was sponsored by TRB committee AV040 Standing Committee on Aviation Economics and Forecasting.
• Corporate Authors:

  Transportation Research Board

  ,    
• Authors:
  • Mahmoudzadeh, Ahmadreza
  • Li, Yihua
  • Wang, Xiubin Bruce
• Conference:
  • Transportation Research Board 102nd Annual Meeting
  • Location: Washington DC, United States
  • Date: 2023-1-8 to 2023-1-12
• Date: 2023

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 24p

Subject/Index Terms

• TRT Terms: Aircraft cabins; Airlines; Pricing; Profitability; Seats; Vehicle capacity
• Subject Areas: Administration and Management; Aviation; Economics; Finance;

Filing Info

• Accession Number: 01875096
• Record Type: Publication
• Report/Paper Numbers: TRBAM-23-01930
• Files: TRIS, TRB, ATRI
• Created Date: Feb 28 2023 11:35AM