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4131. Customized airline offer management: inductive research as proof-of-concept of high-dimensional segmentation
Invited abstract in session WA-59: Pricing and applications 2, stream Pricing and Revenue Management.
Wednesday, 8:30-10:00Room: S08 (building: 101)
Authors (first author is the speaker)
| 1. | Daniel Schubert
|
| University of Antwerp |
Abstract
Airlines serve different customers. Developing customized offer and pricing strategies have become a strategic priority to airlines and have attracted operations research accordingly. The present paper tests the fundamental hypothesis of the offer management system architecture of Schubert et al. (2021) that aims to combine the simplicity of branded fares with the flexibility of unbundled ancillaries. The hypothesis is that the wealth of data available to airlines enables highly granular and high-dimensional segmentation based on multiple features of a particular customer search.
The hypothesis is tested through inductive research based on 202 million flight coupons of a major network airline between 2018 and 2023. The research observes customer choice probabilities differ depending on weekday of the booking. Next, it identifies a pattern. Customer choice probabilities also differ based on sales channel, flight characteristics, and customer loyalty status. Generalizing these findings, this research concludes with a new hypothesis that airlines can improve prediction accuracy of customer choices and hence display more relevant offers when considering these search features. If true, it presents a low-cost process to increase prediction accuracy with data readily available to airlines. The research is relevant to both airline practitioners and researchers for follow-up studies alike.
Keywords
- Revenue Management and Pricing
- Transportation
- Forecasting
Status: accepted
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