Case Article—Introductory Integrative Cases on Airline Revenue Management

Abstract

This case article summarizes two case series. Each case series includes three subcases and has an associated teaching note. These six short cases introduce many of the concepts that underlie the practice of airline revenue management: protection levels, overbooking, customer buy-up and buy-down behavior, network controls, bid prices, and the spiral-down effect. The cases are integrative in the sense that they reinforce many of the fundamental concepts taught in business programs, such as the formulation of statistical models, customer segmentation, the meaning of shadow prices in optimization, and the impact of model errors on real-world decisions. The cases also use many of the basic skills and tools taught in business programs: data analysis and forecasting, simulation, and optimization. By applying these tools, the cases move students quickly beyond the standard newsvendor-style formulation of the revenue management problem. Because the cases require students to apply these tools to interesting and relatively complex revenue management problems, the tools themselves gain more credibility among the students. Case Teaching Note: Interested Instructors please see the Instructor Materials page for access to the restricted materials. To maintain the integrity and usefulness of cases published in ITE, unapproved distribution of the case teaching notes and other restricted materials to any other party is prohibited.