Constructing bundled offers for airline customers

摘要

We consider the problem of product bundling (seats and ancillaries) in the context of offering the right products to airline customers at the right price and in the right manner, so as to best satisfy customer needs and maximize airline revenue. This problem falls on the cusp of airline revenue management (apropos controlling price and availability) and retail e-commerce (apropos bundle design and shopping session management); therefore, we synthesize ideas from both domains to devise a solution framework. Our proposed solution is designed in a modular manner, so as to allow incremental and independent improvements to product design, pricing, and shopping session management. In this paper, we specifically focus on methodologies for offer construction: Creating product bundles and estimating willingness to pay. We demonstrate the utility of these methodologies through illustrative results on real and simulated datasets.