Talk: A Pricing Model To Optimize The Promotions Period In Airlines

Abstract

Promotions help increment the demand for a flight. Several decisions have to be made to offer a promotion such as its price and duration. We propose a method to estimate the behavior of customer inter-arrival time distribution, his buying probability distribution, and the dilution effect from data and develop a stochastic dynamic model to maximize the revenue, evaluating the decision of whether or not to offer the promotion. Finally we study the structural properties of the model and draw conclusions.