Abstract
The dynamic pricing strategy in airline tickets has gained a lot of concern from both air companies and customers. As it has been proved that putting out discount in airline tickets in sometime may increase a company's total revenue. In this paper, after making analysis in both sides of airline and passengers' behaviour, we found that all the different choices made by passengers, whether purchase or keep waiting, come from an invisible logical chain which contains several key driving elements. Thus, we implement hidden Markov model here, trying to model a new pricing mechanism to raise the revenue. The simulation verified this model's practicability.
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