Dynamic Demand Forecasting and Ticket Assignment for High-Speed Rail Revenue Management in China

Abstract

Revenue management is widely practiced in the airline industry yet rarely applied to high-speed rail (HSR). In the history of the rail and HSR industry, passenger ticket assignment across all stations has often been employed to regulate the supply of seats and demand from rail passengers and thus increase profitability. This study proposes a systematic revenue management approach for HSR passenger ticket assignment with dynamic adjustments. A major advantage of the proposed approach is the integration of dynamic ticket assignment and rigorous short-term demand forecasting; this method can effectively avoid the situation in which passenger tickets are not sufficient at some stations while certain seats remain empty on the train. This novel methodology has three main components. First, it develops a short-term passenger flow forecasting method for dynamic travel demand. Second, it builds a passenger ticket assignment model to allocate passenger tickets during presale periods. Third, it incorporates a dynamic ticket adjustment mechanism to adjust previous passenger ticket assignments. For demonstration purposes, the proposed approach is applied to the HSR system in China. Results show that revenue increases by 13.48% when the existing ticket assignment method is improved by this enhanced revenue management method.