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The purpose of this study is twofold: first, to determine whether the level of passenger fares effective on the North Atlantic routes bears close relationship to the cost of operating these routes; and, second, to test a hypothesis that rate making under the International Air Transport Association regulations on the North Atlantic results in a passenger fare/ cost spread in excess of that existing in the Canadian transcontinental commercial air service. While these objectives are intended to reflect general relationships which have existed for some time in both of these markets, only recent statistics are employed to exemplify them. The 1966 data are used throughout the study supplemented by 1965 and 1967 information where deemed necessary. The assumption is made that the aircraft operating costs, or direct costs, incurred in airline operations on the North Atlantic in 1966 were similar to those experienced in providing the Canadian transcontinental service as the aircraft used (DC-8 category) and the average stage length of the routes were similar in both markets. However, as demonstrated through the study, there are differences in the regulatory and economic conditions between the two markets which might have influenced development of these markets, resulting in different application of pricing principles in each. The cost and performance data for selected types of turbo-jet and turbo-fan powered aircraft operated by U.S. carriers on International/ Territorial routes in 1966 are tabulated and analyzed by individual cost category. The analysis progresses from general grouping to specific types of DC-8 equipment and to cost analysis of Pan American World Airways Inc. flying DC-8 aircraft on Atlantic routes in that year. A comparative analysis is first performed on statistics relating U.S. international and Canadian North Atlantic cost experience in 1966. The second part is concerned with comparison of cost levels between Canadian North Atlantic and transcontinental services. In the final phase, various cost concepts are introduced and the available data grouped according to criteria of direct and indirect costs, out-of-pocket and fully allocated cost categories. The fully allocated costs of the North Atlantic and transcontinental Canadian services are compared with passenger fares effective in each market in 1966. It is concluded that the level of passenger fares effective on the North Atlantic routes in 1966 bore very little relationship to the cost of airline operations in that market in the same year. An example presented in the thesis indicates that one-way economy passenger fare between Montreal and London was set at 140 per cent of fully allocated cost of operating this route, at the average load factor of 60.3 per cent. The cost/fare spread in the North Atlantic services, at 40 per cent over fully allocated cost of operation, is much higher than that experienced in the Canadian transcontinental service, at 15 per cent over fully allocated cost. While the conclusions might be valid for other IATA carriers operating on the North Atlantic, it must be borne in mind that only Canadian and U.S. carriers’ cost and performance data were analyzed in the thesis. / Business, Sauder School of / Graduate

When a customer requests a discount fare, the airline must decide whether to sell the seat at the requested discount or to hold the seat in hope that a customer will arrive later who will pay more. I model this situation for a single leg flight with multiple fare classes and customers who arrive according to a semi-Markov process (possibly nonhomogeneous). These customers can request multiple seats (batch requests) and can be overbooked. Under certain conditions, I show that the value function decreases as departure approaches. If each customer only requests a single seat or if the requests can be partially satisfied, then I show that there are optimal booking curves which decrease as departure approaches. I provide counterexamples to show that this structural property of the optimal policy does not hold in general. When customers are allowed to cancel I show that booking curves exist and may be monotone in certain cases. I also consider the situation where the customer's request size and fare offered are not known, but their joint probability distribution is available, and show that under certain conditions existence of booking curves obtains, and that under further assumptions, they are monotone. Finally, the theoretical results are used in realistic numerical examples, which are compared to certain deterministic upper bounds and revenues obtained under heuristic policies. The airline yield management problem described above is an instance of a generic revenue management problem, which, in turn, can be cast into a finite horizon semi-Markov dynamic optimal control problem. I provide examples of other applications of revenue management. / Business, Sauder School of / Graduate

M.Com. (Transport Economics) / It has been noticed that business class travel on South African Airways domestic services is continuously declining. In contrast to this, promotional! travel, that is leisure travel, is becoming more important and significant It is also suspected that the current domestic fares structure of South African Airways ignores certain market factors. The aim of this study is to ascertain whether or not the current domestic fares policy followed by South African Airways, which is reflected in the domestic fares structure, should be changed to the greater benefit of both the air transport user and South African Airways. The objective of establishing guidelines for a long-term fares policy, has been kept in mind throughout the study ....

Keywords. Hub-to-hub network, bid-price control, certainty equivalent control, combinatorial optimization, structures, primal-dual, revenue management, airline network, monotone thresholds, supermodularity/submodularity, L♮ concavity, Lagrange dual. / The subject of this study is the revenue management problem in hub-to-hub airline networks. The network consists of two hubs and a connecting flight between them with spoke cities expanding outwards. The airline produces various itineraries within the network, and its flights compete with each other for limited flight capacities during a fixed booking period. Although stochastic dynamic network revenue management has been theoretically established, in reality its implementation is still heavily dependent on linear programming-based heuristics. Simpson (1989) and Williamson (1992) proposed bid price control, which is now widely adopted by major airlines. Bertsimas and de Boer (2003) proposed certainty equivalent control, which has been little studied by RM researchers. In this thesis, bid price control is first explained, and then the structural properties of the hub-to-hub network are investigated. Using the Lagrange dual-function and the primal-dual relationship, it is shown that the threshold values used in bid price control have some monotone properties in the network's capacity states. The certainty equivalent control is then applied to the hub-to-hub network. By linking the network revenue management problem with a maximum-weight circulation problem in network flow, the optimal value function is shown to be supermodular in certain capacity dimensions, and submodular in other dimensions. This leads to the monotonicity of CEC thresholds on some short-haul itineraries. The notion of L ♮ concavity developed by Murota and Shioura (2005) is applied to this work, and it is shown that even the CEC thresholds on some two-leg or three-leg long-haul itineraries are monotonically increasing or decreasing in certain legs' capacities. It is hoped that the new structural properties found in this thesis can lead to a reduction of the computational work in the implementation of both the bid price control and the certainty equivalent control in the hub-to-hub airline network. / He, Hongzhi. / Adviser: Zhang Shuzhong. / Source: Dissertation Abstracts International, Volume: 72-04, Section: B, page: . / Thesis (Ph.D.)--Chinese University of Hong Kong, 2010. / Includes bibliographical references (leaves 111-118). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. Ann Arbor, MI : ProQuest Information and Learning Company, [200-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstract also in Chinese.

The deregulation of the airline industry created a myriad of changes in the U.S. air transport system that has both defended and sparked debate on the wisdom of such policy change for over three decades. One of the promises of deregulation from its proponents in the 1970s was increased competition that would lead to a reduction in fares for consumers. Historic data and literature has indeed shown this to be to the case as average airfares have trended downward especially over the last twenty years. Nonetheless, the industry has become much more complex since deregulation in terms of pricing to the point that very sophisticated yield management computer models are used to achieve an optimum balance between load factors and price. Consequently, this has in turn translated into a haphazard experience for most air travelers in the United States; for instance, the cost of a ticket is sometimes lower traveling from coast to coast than within a particular region of the U.S. and paid fares for the exact same trip can deviate dramatically, often based on variation in the date of purchase. Additionally, this has also resulted in a spatial pattern where certain regions throughout the country have enjoyed lower airfares more so than others. This research seeks to identify this regional disparity using a geographically weighted regression and spatial autoregressive models in a sample of 6,200 routes between 80 primary U.S. airports. The results from the global model showed that variables which measure competition (airlines), operating cost (flights, distance) and elasticity (layover time) proved to be statistically significant and had a positive relationship with airfare The GWR results indicated that while some factors like distance, and hub size, were statistically significant almost nationwide, other factors such as frequency, presence of low cost carriers, and numbers of airlines were only statistically significant at certain airports. Finally, the spatial regressions models indicate that the spatial autocorrelation found in U.S. airfares resemble the first order properties of spatial autocorrelation (i.e. spatial heterogeneity) and not the second order properties (i.e. spatial dependence). / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2014. / FAU Electronic Theses and Dissertations Collection

机票超售,即售出的機票多於飛機客艙座位的數量，已經作為“國際慣例“被航空公司廣泛採用。但是这种做法是有争议的，因為其容易導致航班超售，使得旅客被拒登機而滯留，影響航空公司的聲譽。在這篇論文中，我們使用逆向拍賣的機制尋找自願放棄登機資格的旅客以收回部份已預售的低端機票來滿足高端旅客的需求，并同時根據拍賣實現的結果來賠償被拒絶登機旅客。具體地說，我們建立一個二期的機票銷售模型，並且假定低端與高端旅客分別在第一第二個銷售期到來，而航空公司通過決定其在兩個銷售期的銷售策略，使得其利潤最大化。在模型中，航空公司可利用逆向拍賣的方法，要求低端旅客在購買機票的時候，提交一個其在因為航班超售時，自願放棄座位的赔偿要求。當航班超售時，航空公司可根據低端旅客的競投信息，從中挑選出價最低的旅客，通過滿足他們的賠償要求，收回他們的機票以滿足高端旅客的需求。我们发现我们的机制在大多数情况下，可以提高航空公司的利润，改善航班的登機效率，同时，也能滿足部份低端旅客通過改變計劃行程獲取賠償的需求。我們也會比較逆向拍賣機制與其他現有機制，例如固定價格補償機制。此外，我們也會就逆向拍賣機票銷售模型中的定價问题进行研究。 / With increasing applications of revenue management, airline companies often oversell their tickets. This practice is controversial because some passengers would not be able to board when the number of show-up customers exceeds the available seats. And this might make the affected customers upset and thus affect the future revenue of the airline. In this paper, we propose a new mechanism - a call-back auction, in which the passengers are asked to submit a bid to indicate the compensation they would like to receive for giving up their seats and changing their original flight schedule. This could provide the airline with information to select passengers with the lowest compensation requirements and also reduce the negative impact on customer relationship. We develop a model with booking limit decision and examine the impact of this call-back auction mechanism on the airline's profitability and compare it with other existing mechanisms such as fixed-price compensation. We find that our mechanism can lead to higher profit for the airlines in most cases. In this study, pricing issues are also examined. / Detailed summary in vernacular field only. / Zhong, Zhiheng. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2012. / Includes bibliographical references (leaves 72-76). / Abstracts also in Chinese. / Table of Contents --- p.vii / Chapter 0 --- Notation / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Literature Review --- p.7 / Chapter 3 --- Call-back Auction --- p.13 / Chapter 3.1 --- The Concept --- p.13 / Chapter 3.2 --- Implementation --- p.14 / Chapter 4 --- A Two-Period Model with Call-back Auction --- p.19 / Chapter 4.1 --- Uniform Price Call-back Auction --- p.21 / Chapter 4.2 --- Numerical Examples --- p.27 / Chapter 4.3 --- First-price Call-back Auction --- p.35 / Chapter 4.4 --- Revenue Comparison --- p.39 / Chapter 4.5 --- Call-back Auction with Reserve Compensation --- p.41 / Chapter 4.6 --- Alternative Information Structure --- p.50 / Chapter 5 --- Endogenous High-fare Price --- p.59 / Chapter 5.1 --- Additive Demand Function --- p.60 / Chapter 6 --- Conclusion --- p.68 / Bibliography --- p.72

The purpose of this study is to investigate the correlation of U.S. domestic air travelers and patterns of air travel purchase within the U.S. air travel industry. Influences on the patterns of air travel purchase involved 1) demographic characteristics of travelers 2) benefits to the customer 3) customer attitude toward service providers' (defined as airlines, web-based travel agents, and traditional travel agents and 4) information sources used to select and book a flight for business and leisure trips.

Study project (MEcon) -- University of Stellenbosch, 2000. / ENGLISH ABSTRACT: This assignment explains the search for a mechanism that can increase tourism flow by improved utilisation of airline capacity. The inherent characteristics of air transport indicate that the industry is subject to low short term marginal costs and that it is very tempting to award discount tariffs for last minute bookings. The challenge to management is to attract new passengers with discount tariffs without loosing full tariff passengers. Travel clubs are one of the mechanisms that are utilised to achieve aforementioned objective. These clubs offer mainly discount tariffs on hotel accommodation, car hire and airline tickets to their members. The acceptability of a travel club that applies restricting measures such as for example short notice periods, adaptable depart and return dates and shortened lead times have been tested in the South African market. The majority of respondents surveyed were in favour of such a travel club. An important finding is that South Africans are prepared to travel in a chosen month but that the travel dates within that month are adaptable in exchange for discount tariffs. The research also indicate that the availability of funds was decisive in the decision to travel or not to travel over seas. In order to overcome this problem the introduction of a providence account is recommended as part of the travel club's products. The challenge for the travel club is thus to consolidate the demand and to match it with the excess airline capacity. / AFRIKAANSE OPSOMMING: Hierdie werkstuk beskryf die soeke na 'n meganisme wat toerismevloei kan verhoog deur die verbeterde kapasiteitsbenutting van lugvervoer. Die inherente kenmerke van lugvervoer toon dat die bedryf onderhewig is aan lae korttermyn marginale koste en dat die versoeking groot is om afslagtariewe vir op die nippertjie besprekings toe te staan. Die uitdaging vir die bestuur is om nuwe passasiers met afslagtariewe te lok sonder om voltariefpassasiers prys te gee. Reisklubs is een van die meganismes wat gebruik word om die voorgenoemde doelwit te bereik. Hierdie klubs bied hoofsaaklik afslagtariewe op hotelverblyf, motorhuur en vliegtuigkaartjies aan hul lede. Die aanvaarbaarheid van 'n reisklub wat beperkende rnaatreels soos, byvoorbeeld, kort kennisgewingstydperke, aanpasbare vertrek en terugkeer datums en verkorte leityd toepas, is in die Suid-Afrikaanse mark getoets. Die meerderheid van respondente in die ondersoek was ten gunste van so 'n reisklub. 'n 8elangrike bevinding is dat Suid-Afrikaners bereid is om in 'n gekose maand te reis, maar dat die spesifieke reisdatums in daardie maand aanpasbaar is in ruil vir afslagtariewe. Die navorsing toon ook dat die beskikbaarheid van fondse deurslaggewend is in die besluit om oorsee te reis of nie. Om hierdie probleem te oorkom word die instelling van 'n voorsieningsrekening aanbeveel as dee I van die reisklub se produkte. Die uitdaging aan die reisklub is dus om die vraag te konsolideer en dan af te stem op die oormaatkapasiteit van die lugrederye.

Revenue Management (RM) is the practice of managing perishable assets by control-ling their availability and/or prices with an objective to maximize the total revenue. Seat inventory allocation falls in the purview of quantity-based RM. The liberalization of the aviation sector and the subsequent entrance of the low-cost carriers saw an ever-increasing customer base for the airline industry. Given the large number of buyers, firms were free to decide the price at which they would sell tickets. The low-cost carriers started to follow a third degree price discrimination and segmentation of the market, charging a higher price to the market with a relatively inelastic demand. Although a lot of work has been done in the area of seat inventory allocation under a monopolistic market scenario, we realized that not a lot of work had been done in a competitive market scenario. This thesis considers the problem of seat inventory allocation and pricing in a duopoly where each of the competing airlines have two fare-classes. We consider the possibility that the same fare-class may be priced differently by the two competing airlines and allow for the over flow of passengers between the airlines in the same fare-class. In the first part of our work, we develop a non-linear mathematical model for setting the booking limits for one of the two competing air-lines such that the revenue earned is maximized. We consider over flow of passengers from one airline to another in the same fare-class in response to a price differential and compare the results obtained from our model with the standard Expected Marginal Seat Revenue (EMSR) model under a monopolistic scenario. The results show that our model gives higher revenues than that obtained from the EMSR model. In the second part of our work, we consider a non-cooperative game between two competing airlines with price cutting as the strategy to increase their demand. Through numerical computations, we identify the pure strategy Nash equilibrium. From the results, we conclude that Nash equilibrium is achieved only when both the airlines follow the same pricing strategy indicating that individual price cutting will not be beneficial. This also indicates that unless the competitors enter into a cooperative coalition with each other, they would not benefit from deep discount offers. In the third and final part, we prove theoretically the existence of pure strategy Nash equilibrium in a two airline, two fare-class problem with price sensitive over flow of customers in the same fare-class that was computationally analysed earlier. The strategy / strategies at which Nash equilibrium is achieved are identified. We show that Nash equilibrium is only achieved when both the airlines price identically. Hence, our thesis concludes that differential pricing does not hold any significance for the competing airlines from an operational perspective.