The paper presents a return on quality model designed to assess projects of service quality that can help airlines in retaining passengers. Such models can enable carriers simulate scenarios and assist management in decision-making processes, identifying the elements of performance that can lead to rejection or approval by passengers. An application of the methodology considers the flight firmi...

Revenue management practices often include overbooking capacity to account for customers who make reservations but do not show up. In this paper, we consider the network revenue management problem with no-shows and overbooking, where the show-up probabilities are specific to each product. No-show rates differ significantly by product (for instance, each itinerary and fare combination for an air...

Passengers on the same commercial airline flight—sometimes even those in adjoining seats—may pay fares that vary widely. This fact has led to dissatisfaction by some passengers who believe their ticket prices are too high and that airline ticketing practices are unfair. In an effort to reduce their cost of flying, some passengers have attempted to use " hidden-city " and " back-to-back " ticket...

Companies in a variety of industries (e.g., airlines, hotels, theaters) often use last-minute sales to dispose of unsold capacity. Although this may generate incremental revenues in a short term, the long-term consequences of such a strategy are not immediately obvious: more discounted last-minute tickets may lead to more consumers anticipating the discount and delaying the purchase rather than...

I n many industries, managers face the problem of selling a given stock of items by a deadline. We investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm's objective is to maximize expected revenues. Examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry, which ...

Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents (OTAs). We find t...

Most studies investigating passenger’s expectations of the airline transportation industry focuses on service quality and satisfaction relating to only the airline industry. This paper deals with an overview of travellers’ expectations of personal activities as part of their airline transportation experience. These aspects refer to expectations of South African and Malaysian travellers when at ...

Several authors have argued that because modern computing and communications technologies reduce buyer search costs and other market inefficiencies, there should be intense price competition between sellers in electronic markets. This paper examines this prediction using data on the airline ticket offerings of online travel agents (OTA). We find that different OTAs offer tickets with substantia...

Hidden-city ticket is an interesting airline ticket pricing phenomenon. It occurs when an itinerary connecting at an intermediate city is less expensive than a ticket from the origin to the intermediate city. In such a case, passengers traveling to the intermediate city have an incentive to pretend to be traveling to the final destination, deplane at the connection point and forgo the unused po...

We formulate and analyze a Markov decision process (dynamic programming) model for airline seat allocation (yield management) on a single-leg flight with multiple fare classes. Unlike previous models, we allow cancellation, no-shows, and overbooking. Additionally, we make no assumptions on the arrival patterns for the various fare classes. Our model is also applicable to other problems of reven...