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Incentive mechanism to control customer buy-down behaviour

Vanamalla, Sri V and Parthasarathy, R (2011) Incentive mechanism to control customer buy-down behaviour. In: Journal of the Operational Research Society, 62 (8). pp. 1566-1573.

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Official URL: http://www.palgrave-journals.com/jors/journal/v62/...


Airlines have successfully practiced revenue management over the past four decades and enhanced their revenue. Most of the traditional models that are applied assume that customers buying a high-fare class ticket will not purchase a low-fare class ticket even if it is available. This is not a very realistic assumption and has led to revenue leakage due to customers exhibiting buy-down behaviour. This paper aims at devising a suitable incentive mechanism that would incite the customer to reveal his nature. This helps in reducing revenue leakage. We show that the proposed incentive mechanism is profitable to both the buyer and seller and hence ensures the buyers participation in the mechanism. Journal of the Operational Research Society (2011) 62, 1566-1573. doi:10.1057/jors.2010.57 Published online 11 August 2010

Item Type: Journal Article
Publication: Journal of the Operational Research Society
Publisher: Palgrave Publishers Ltd
Additional Information: Copyright of this article belongs to Palgrave Publishers Ltd.
Keywords: buy-down control;revenue management;mechanism
Department/Centre: Division of Interdisciplinary Sciences > Management Studies
Date Deposited: 29 Jun 2011 08:59
Last Modified: 29 Jun 2011 08:59
URI: http://eprints.iisc.ac.in/id/eprint/38624

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