Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1024131 | Transportation Research Part E: Logistics and Transportation Review | 2007 | 17 Pages |
Abstract
This 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.
Related Topics
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Authors
Julian Pachon, Murat Erkoc, Eleftherios Iakovou,