Evaluating airlines ticket distribution strategies: a simulation-based approach

Abstract

This paper presents a modelling framework to evaluate ticket distribution strategies for commercial airlines. The framework adopts a micro-simulation approach that replicates how prospective travellers select their travel itineraries that are provided through ticket distribution channels. The model simulates travellers' itinerary choices at the disaggregate level and dynamically updates seat availability on the different itineraries. The model examines the trade-offs between two common types of ticket distribution channels: (1) distribution channels with high market penetration and high competition among subscribed airlines (e.g. Travelocity, Expedia, Orbitz) vs. (2) distribution channels with low market penetration and low airlines competition (e.g. aa.com, continental.com).

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