Airline Revenue Management: Optimization Using Origin-Destination Strategy Controlled by Nested Heuristics

摘要

Effective revenue management practice can be the single most important factor in distinguishing between success and failure of an airline and spell the difference between profitability and loss for a particular flight. This paper deals with usage of Deterministic Linear Program to optimize the network as a whole and uses LINGO to solve the DLP as it has 120 variables and 127 constraints and is impossible to solve manually. Optimization strategies taken into consideration are: Leg Based Expected Margins, Seat Revenue (EMSR), and Deterministic Linear Program (DLP). In the seat inventory control process Nested Heuristics is used for an improved and accurate result.