E-commerce and operations research in airline planning, marketing, and distribution

Many e-commerce principles were pioneered in the airline industry. These include the first business-to-business electronic information exchange and industrywide electronic marketplace. This environment provided unprecedented opportunity for operations research (OR) modeling. By the mid-1980s airlines used customer shopping data to calibrate traveler-demand-and-choice models, analyzed multichannel product-distribution strategies with simulation, and practiced dynamic pricing through yield management. Airlines continue to derive billions of dollars annually from these and derivative models. The availability of reliable, low-cost communications via the Internet is providing new modeling challenges within the airline industry and is also providing similar opportunities in other industries.