Analyzing Mathematical Models in the Transition to Network-Based Revenue Management: A Comprehensive Review

Abstract

Airlines have expanded hub-and-spoke networks, leading to a notable rise in the importance of network-based revenue management systems. In their pursuit to maximize overall revenue, an airline's network RM-based system differentiates between local passengers using single resources and connecting or flow passengers utilizing multiple resources. Despite being theoretically ideal, these systems can be difficult to implement directly in real-world scenarios. The implementation of such systems often relies on assumptions that may lead to suboptimal decisions if incorrect. This article aims to outline the primary challenges practitioners may encounter during the transition to a network-based RM system. It begins with a brief overview of typical network-based RM models and then delves into three areas where this system could potentially lower an airline's revenue: forecasting optimization, and distribution. The goal is to elucidate each of these areas and their respective difficulties related to implementing a network RM system in detail so that fellow researchers can consider them within the field of network RM while providing practitioners insights for addressing these issues during the implementation process within their organization Key Words: Airline hub-and-spoke networks, Revenue management, network-based RM models, forecasting, network optimization, distribution.”