Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs
Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2012.
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| Format: | Thesis |
| Language: | eng |
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Massachusetts Institute of Technology
2013
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| Online Access: | http://hdl.handle.net/1721.1/78147 |
| _version_ | 1826202060962398208 |
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| author | Michel, Alyona |
| author2 | Peter P. Belobaba. |
| author_facet | Peter P. Belobaba. Michel, Alyona |
| author_sort | Michel, Alyona |
| collection | MIT |
| description | Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2012. |
| first_indexed | 2024-09-23T12:01:15Z |
| format | Thesis |
| id | mit-1721.1/78147 |
| institution | Massachusetts Institute of Technology |
| language | eng |
| last_indexed | 2024-09-23T12:01:15Z |
| publishDate | 2013 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/781472019-04-10T23:13:31Z Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs Improving joint revenues through partner sharing of flight leg opportunity costs Michel, Alyona Peter P. Belobaba. Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering. Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering. Civil and Environmental Engineering. Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2012. Cataloged from PDF version of thesis. Includes bibliographical references (p. 125-128). Airlines participating in alliances offer code share itineraries (with flight segments operated by different partners) to expand the range of origin-destination combinations offered to passengers, thus increasing market share at little cost. The presence of code share flights presents a problem for airline revenue management (RM) systems, which aim to maximize revenues in an airline's network by determining which booking requests are accepted. Because partners do not jointly optimize revenues on code share flights, alliance revenue gains from implementing advanced RM methods may be lower than an individual airline's gains. This thesis examines seat availability control methods that alliance partners can adopt to improve the total revenues of the alliance without formally merging. Partners share information about the opportunity costs to their network, called "bid prices", of selling a seat on their own flight leg, a mechanism termed bid price sharing (BPS). Results show that BPS methods often improve revenues and work best for networks with certain characteristics and partners with similar RM systems that exchange recently calculated bid prices as often as possible. Gains are typically only achieved if both alliance partners participate in the code share availability decision (called dual control) rather than one partner only, but implementation of dual control is more difficult for airlines in practice. In the best case scenario, gains of up to .40% where achieved, which can translate into $120 million per year for the largest airlines. In our simulations, BPS with dual control and frequent bid price calculation and exchange was the only method that produced consistently positive revenue gains in all the scenarios tested. Therefore, alliance airlines must consider the trade off between revenue gains and implementation difficulties of more frequent bid price exchange or dual control. by Alyona Michel. S.M.in Transportation 2013-03-28T18:08:18Z 2013-03-28T18:08:18Z 2012 2012 Thesis http://hdl.handle.net/1721.1/78147 829253440 eng M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 128 p. application/pdf Massachusetts Institute of Technology |
| spellingShingle | Civil and Environmental Engineering. Michel, Alyona Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs |
| title | Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs |
| title_full | Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs |
| title_fullStr | Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs |
| title_full_unstemmed | Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs |
| title_short | Airline alliance revenue management : improving joint revenues through partner sharing of flight leg opportunity costs |
| title_sort | airline alliance revenue management improving joint revenues through partner sharing of flight leg opportunity costs |
| topic | Civil and Environmental Engineering. |
| url | http://hdl.handle.net/1721.1/78147 |
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