An integrated seat allocation model for individual and group demand in airlines

This study is focused on the seat assignment problem for group demand in airlines. Since airlines have considered that groups may dilute the high revenue opportunities, they have not dealt the group demand with an important revenue source. However, if properly managed, group demands can increase the total revenue. There are two types of group demands in air travel markets: series group and ad hoc group. In this paper, we focus on the series group demand. The seat assignment problem can be modeled as a stochastic programming model which is difficulty to solve optimally. In this paper, we have some assumptions on the demand distribution functions and apply a linear approximation technique. Thereby, we can transform the complex stochastic programming model to a mixed Integer Linear Programming model. To analyze the validity and the performance, we test our model with some randomly generated group demands. The computational experiment shows that ours may be useful and applicable in practice effectively.