A DYNAMIC MODEL FOR A TWO-CABIN YIELD MANAGEMENT WITH FREE UPGRADING DECISION

Abstract

It is a current airline industry practice to upgrade passengers from the economy cabin to the business cabin at no additional cost to the passengers. Incorporating this practice, this paper deals with a single-flight-leg multi-fare class seat inventory control problem. A discrete-time dynamic programming model for finding the optimal booking policy is developed. It is found that the booking policy can be reduced to some set of critical values.