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Old Mar 18, 2003 | 2:48 pm
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FCfree
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I'm not sure I understand how yield management precludes Load Factor Dynamic Rebalancing (I love that name!).

Say an airline has 10 fare classes and 13 seats in each class for a total of 130 seats. The airline sells 80 seats in 7 fare classes (6x13+2=80). Fourty-eight hours before the flight, the past experience is that the airline sometimes sells up to 6 seats at a premium price. The airline had scheduled an aircraft that has 130 seats, but also has an aircraft that has 90 seats. The airline searches its databases to find a crew for the smaller aircraft. If it finds one, it substitutes the aircraft. The airline "commits" the smaller aircraft at that point, giving up the revenue if more than 10 people show up at the last minute (or, perhaps just flying them on a less than direct route) It still has exactly the same revenue assuming that 90 people or less want to fly, but they fly a smaller aircraft, thus saving money.

If the airline can schedule faster, perhaps it can commit at 24 hours prior to the flight. That would be even more efficient.

If the airline can't find a crew to fly the route, the airline sticks with the 130 seat aircraft. Or, if the aircraft is going from X to Y to Z and the Y to Z leg has more than 90 seats sold, they stay with the 130 seat aircraft.

Easy? No. More Profitable? I think it could be. To figure out if it is more profitable, I or the airline would have to run experiments on a database of past sales patterns combined with data about types of aircraft available, crew availability, etc.

Getting the aircraft in position for maintenance, or for the next day's flights obviously are critical parameters too. Just another parameter to make the problem more complex, but a necessary parameter none-the-less.
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