Teaching Notes - BlueSky Airlines: Single-Leg Revenue Management (A-C)

Introduction These cases focus on the revenue management of a single flight leg with two fare classes and uncertain demand. The (A) Case asks the students to forecast high-fare demand and implement a simple bookinglimit policy. The (B) Case uses simulation to establish booking limits in the presence of buy-up behavior and cancellations. The (C) Case focuses on the spiral-down effect, which occurs when there is a mismatch between the revenue management optimization model and actual customer behavior. This Teaching Note first describes the logistics for using the cases: the order of the cases, choosing assignments, and the timing of class discussions. Then the note summarizes each case, describes potential solutions, and provides guidelines for class discussions. The last section describes technical background, extensions, and additional reference material. The final section may be particularly useful for instructors without a strong background in revenue management as the section or its references may provide answers to students’ questions about the implementation of revenue management systems. The final section also explains how the models in this case may be adapted to handle multileg itineraries in an airline network, as described in the BlueSky Airlines: Network Revenue Management Case Series.