Air cargo revenue management under buy-back policy

Danping Lin, Ka Man Lee, Jilin Yang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

8 Citations (Scopus)

Abstract

This paper examines the air cargo booking and execution procedure to measure the applicability of the buy-back policy in the air cargo revenue. By applying buy-back policy during the period of order release and order execution, a revenue model is built which incorporates Hellermann's capacity option model into the Black-Scholes pricing model. The results demonstrated that buy-back policy not only answers the questions of whether to buy-back, when to buy-back and how much to buy-back, but also increases the revenues of both asset provider and intermediary. Further study is extended in the overbooking and partial buy-back scenarios. The buy-back policy showed better performance in these two scenarios compared with current approach.
Original languageEnglish
Pages (from-to)53-63
Number of pages11
JournalJournal of Air Transport Management
Volume61
DOIs
Publication statusPublished - 1 Jun 2017

Keywords

  • Air cargo
  • Asset provider
  • Buy-back
  • Intermediary
  • Overbooking
  • Revenue management

ASJC Scopus subject areas

  • Transportation
  • Strategy and Management
  • Management, Monitoring, Policy and Law
  • Law

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