Airline seat allocation with multiple nested fare classes
Operations Research
Pricing and the News Vendor Problem: a Review with Extensions
Operations Research
Revenue Management: Research Overview and Prospects
Transportation Science
Finite Horizon Stochastic Knapsacks with Applications to Yield Management
Operations Research
A Dynamic Model for Airline Seat Allocation with Passenger Diversion and No-Shows
Transportation Science
The Dynamic and Stochastic Knapsack Problem with Random Sized Items
Operations Research
Overbooking with Substitutable Inventory Classes
Operations Research
Fleeting with Passenger and Cargo Origin-Destination Booking Control
Transportation Science
Single-Leg Air-Cargo Revenue Management
Transportation Science
The benefit of VMI strategies in a stochastic multi-product serial two echelon system
Computers and Operations Research
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Although air carriers derive revenue from both passengers and cargo, the majority of the literature on airline management has focused on passengers. With the rapid growth in air freight, more studies are needed to examine the growing impact of air freight on air transportation. This paper addresses the optimal baggage-limit policy for airlines. Because much of the cargo is currently transported in the residual aircraft belly space after all of the passenger baggage has been enplaned, it is important for carriers to plan passenger and cargo levels together when setting passenger baggage limits. We formulate this problem as a variant of the price-dependent multi-item newsvendor model with weight-volume capacity constraints. The effects of baggage weight, prices, and costs on the number of passengers and amount of cargo carried are studied. Based on the model and carriers' existing practice, we develop several illustrative cases. Our findings suggest that airlines may be able to increase profits with significant reductions in passenger baggage limits for large aircraft.