Performance of dynamic user influence strategies in PODS under seasonality and system volatility

This paper summarizes results from Passenger Origin–Destination Simulator (PODS) research on how dynamic user influence performs under seasonality and system volatility. We explore the revenue results for two different dynamic user influence (UI) strategies—unbiased and biased high–under varying dem...

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Bibliographic Details
Published inJournal of revenue and pricing management Vol. 18; no. 1; pp. 2 - 26
Main Author Weatherford, Larry
Format Journal Article
LanguageEnglish
Published London Palgrave Macmillan UK 01.02.2019
Palgrave Macmillan
Subjects
Airlines
Business and Management
Demand
Operating systems
Research Article
Revenue management
Seasonal variations
Dynamic user influence
Correlation of demand
Volatility
Seasonality
Airline revenue management
Passenger choice
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Summary:This paper summarizes results from Passenger Origin–Destination Simulator (PODS) research on how dynamic user influence performs under seasonality and system volatility. We explore the revenue results for two different dynamic user influence (UI) strategies—unbiased and biased high–under varying demand levels, with and without hybrid forecasting, under either strong-positive or weak-positive correlation of demand. In short, dynamic UI seeks to emulate revenue management (RM) analysts’ attempts to positively influence the RM system. In this study, we use a large “international” network with 572 O-D markets and four different airlines competing for passengers, including a low-cost carrier. The revenue results show that out of 224 individual experiments, we only found eight cases (less than 4%) where there was not a revenue improvement over the comparable base case without dynamic UI. This is a ringing endorsement of the use of dynamic UI, independent of demand level, or forecasting strategy.
ISSN:1476-6930
1477-657X
DOI:10.1057/s41272-017-0135-8