AbstractThis paper develops a non-linear programming model to design optimal corporate contracts for airlines stipulating front-end discounts for all nets, which are defined by combination of routes, cabin types, and fare classes. The airline’s profit is modeled using a multinomial logit function that captures the client’s choice behavior in a competitive market. Alternative formulations are employed to investigate the impact of price elasticity, demand, and competition on optimal discounting policies. A case study involving a major carrier is presented to demonstrate the model. The results indicate that airlines can increase revenues significantly by optimizing corporate contracts using the suggested model.
Contract optimization with front-end fare discounts for airline corporate deals
Transportation Research Part E: Logistics and Transportation Review ; 43 , 4 ; 425-441
2005-12-05
17 pages
Article (Journal)
Electronic Resource
English
Contract optimization with front-end fare discounts for airline corporate deals
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