A NEW APPROACH FOR AIRLINE REVENUE MANAGEMENT: TOTAL REVENUE BOUNDARIES

Abstract

Purpose - The purpose of the paper is developing and testing an advanced version of an existing method in the literature, which is used for airline revenue management (ARM). Methodology – Expected marginal seat revenue (EMSR) is the mostly used heuristic revenue management model for literature and real life problems. In the paper, EMSR is developed, and an advanced heuristic method is formed. The new method is called total revenue boundaries (TRB). The method is tested by a problem and compared with EMSRa, EMSRb and EMSRc, which are three types of EMSR in the literature. Findings- According to the results, TRB outperforms than EMSRa, EMSRb and EMSRc. It gives higher revenue levels with higher load factors. Conclusion- At the end of the study, the most common ARM method is improved. By this way, a new heuristic model is gained, which does not need complicated calculations. TRB keeps the uncomplicated nature of EMSR but gives better results.

Keywords

• Airline revenue management,total revenue boundary,expected marginal seat revenue (EMSR),optimization,seat inventory management

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