Estimation of passenger sell-up rates in airline revenue management by considering the effect of fare class availability

Resul Aydemir*, Mehmet Melih Değirmenci, Abdullah Bilgin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This paper introduces a new method for estimating sell-up rates that show a passenger’s propensity to purchase the upper fare class using class-based historical booking data. The performance of models in the literature, such as Direct Observation (DO) and Inverse Cumulative (IC), is not satisfactory when applied to the actual historical booking data since their results do not match the business expectations. We improve these models and design data pre-processing and solution techniques that can be beneficial for practitioners in dealing with historical booking data. Adjusting the past bookings with fare class availability data, our model provides a robust sell-up rate estimation. We examine data of a major European airline in our analysis. Numerical results show that our proposed method decreases MAPE (mean absolute percentage error) significantly.

Original languageEnglish
Pages (from-to)501-513
Number of pages13
JournalJournal of Revenue and Pricing Management
Volume22
Issue number6
DOIs
Publication statusPublished - Dec 2023

Bibliographical note

Publisher Copyright:
© 2023, The Author(s), under exclusive licence to Springer Nature Limited.

Keywords

  • Exponential distribution
  • Fare-class availability
  • Market demand
  • Sell-up rate

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