Article ID Journal Published Year Pages File Type
1024131 Transportation Research Part E: Logistics and Transportation Review 2007 17 Pages PDF
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
Social Sciences and Humanities Business, Management and Accounting Business and International Management
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