Dynamic Pricing And Operational Mechanisms For Airline Conserdering Competition And Strategic Passengers

As a powerful tool of revenue management,dynamic pricing is a business strategy that participates in the market competition and increases revenue.The traditional dynamic pricing mostly focus on the monopoly case that studies airline maximum profit through adjusting the ticket price.With the intensification of market competition,a route often has many scheduled flights.So airlines have to predict and consider other competitors' sale strategy while setting price.At the same time,passenger strategic behavior also attacks the airline's original price system.So considering the market competition factor and customer's purchase behavior in the price model,and proposing effective operational mechanisms have great significance for airlines.This paper includes the following parts: firstly,according to the characteristic of the aviation market,the passenger purchase behavior can be divided into myopia and strategy.This paper researches the two airlines with traditional dynamic pricing policy with the coexistence of myopic and strategic passengers under deterministic demand.The equilibrium price and expected revenue are obtained by building two-period dynamic pricing model when the number of myopic and strategic passengers is common.Then we extend the model in which myopic and strategic passengers random proportion and analyze the airlines price equilibrium.Research shows that two airlines using dynamic pricing strategy exist pure-strategy Nash equilibrium in both cases.Secondly,price display mechanism is introduced into model that the coexistence of myopic and strategic passengers under deterministic demand.We explore the price equilibrium of price display strategy with the same number and random proportion of myopic and strategic passengers.Then we compare the airline's revenue differences of dynamic pricing and price display policy,and conclude the application scope of both strategies.Thirdly,this paper researches the airlines dynamic pricing and operational mechanisms considering passenger strategic behavior when demand is uncertainty.For the passenger strategy purchasing behavior,the opaque selling mechanism is introduced into the ticket sale process.We propose a Hotelling model and obtain the optimal price,market coverage and expected revenue of airlines with two mechanisms.Finally,we use some numerical experiments to analyze the effectiveness of the opaque mechanism from the angle of airline and intermediary.