Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5111490 | Journal of Air Transport Management | 2017 | 11 Pages |
Abstract
Few researches address the application of financial “buy-back” concept in the air cargo revenue management. This paper examines the air cargo booking and execution procedure to measure the applicability of the buy-back policy in the air cargo revenue. By applying buy-back policy during the period of order release and order execution, a revenue model is built which incorporates Hellermann's capacity option model into the Black-Scholes pricing model. The results demonstrated that buy-back policy not only answers the questions of whether to buy-back, when to buy-back and how much to buy-back, but also increases the revenues of both asset provider and intermediary. Further study is extended in the overbooking and partial buy-back scenarios. The buy-back policy showed better performance in these two scenarios compared with current approach.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Strategy and Management
Authors
Danping Lin, Carman Ka Man Lee, Jilin Yang,