Consider a multi-period multi-fare class airline booking problem related to a two-leg airline network. Travel requests include outbound, inbound trip, and round trips. The round-trip refers to a journey comprising both outbound and inbound trips. To develop a dynamic-nested booking decision-making system for the airline network, this study designs a dynamic model that enables the airline reservations system to devise a set of dynamic decision rules for any given booking status. | Yugoslav Journal of Operations Research 14 (2004), Number 2, 155-170 AIRLINE SEAT MANAGEMENT WITH ROUND-TRIP REQUESTS Peng-Sheng YOU Graduate Institute of Transportation & Logistics National Chia-Yi University, Taiwan psyuu@ Received: February 2003 / Accepted: February 2004 Abstract: Consider a multi-period multi-fare class airline booking problem related to a two-leg airline network. Travel requests include outbound, inbound trip, and round trips. The round-trip refers to a journey comprising both outbound and inbound trips. To develop a dynamic-nested booking decision-making system for the airline network, this study designs a dynamic model that enables the airline reservations system to devise a set of dynamic decision rules for any given booking status. The booking process is found to be controlled by some set of booking thresholds. Keywords: Airline, inventory, booking, revenue management. 1. INTRODUCTION Since the fare deregulation of the airline industry in 1978, many airline companies have used discriminatory pricing policies in order to segment potential customers into competitively relevant groups in order to maximize revenues. A common approach is to divide a pool of identical seats in the same cabin of a flight into several fare classes through different restrictions and charge different fares (. Belobaba (1987)). In circumstances where the capacity of the aircraft is relatively fixed and cannot be changed in short notice, and the marginal cost of carrying an additional passenger proves relatively lower compared to high fixed costs incurred from passengers with reserved bookings, airline companies devise booking schemes in order to fill in vacant seats since those vacant seats upon departure time mean lost revenues. Airline passengers can roughly be categorized into two groups: reserved passengers and go-show passengers. Reserved passengers book airline seats in advance. They have the right to board the airplane during departure .
