Customized Offers in Airline Revenue Management

摘要

Improvements in information technology could soon allow airlines to generate customized fare offers for individual passengers. By strategically targeting offers towards the right customers at the right time, airlines could increase revenues by stimulating additional bookings from price-sensitive travelers while encouraging more price-inelastic travelers to buy-up to higher price points. In this work, we introduce a "dynamic availability" method for generating customized fare offers through an assortment optimization and dynamic pricing framework. We propose a general model for decoupling the customized offer generation problem from the well-studied airline revenue management problem. After generating a baseline assortment and observing a passenger's characteristics, an airline can choose to customize that passenger's offer by either adjusting the products in the assortment or changing the offered prices for those products. Unlike other recent approaches for personalized assortment optimization, our method applies customization after traditional RM optimization, making the heuristics compatible with current airline RM methods and systems. For implementation, we propose a straightforward heuristic approach based on simple estimates of passenger willingness-to-pay. The heuristics are simulated in the Passenger Origin-Destination Simulator (PODS), a complex airline revenue management simulation environment that takes into account passenger choice and competition. The results show that the heuristics can be revenue positive for airlines and stable in competitive environments.