A DYNAMIC PRICING MODEL FOR AIRLINE REVENUE MANAGEMENT BASED ON REAL OPTIONS APPROACH

摘要

Uncertainties in demand in Airline companies were figured out; various forms of dynamic pricing methods were used to increase revenue. Traditional dynamic pricing ignores the potentially flexible revenue from tickets advance sale process. Connecting real options with key operational decision, a novel real options approach for airline revenue management was presented. The advance sale of tickets was considered as the airline tickets sale operator who held a European option, which starting at j t t = with a payout of ω at 1 + = j t t , it could be exercised only at time 1 + = j t t . The firm had the option of selling or holding the tickets. Analysis indicated that the model produced minimally acceptable prices and inventory release quantities (number of tickets available for sale at a given price). Referred on binomial and the Black–Scholes pricing models, a set of stochastic differential equation were used to solve the problem, it performed well when considering the potential revenue in tickets sale mechanism.