Airline demand distributions: passenger revenue management and spill

Both revenue management and airline schedule optimization need to characterize the distribution of likely demand outcomes. Sources have proposed both Gamma and Normal shapes for these distributions. Data suggests that a model combining both distributions is appropriate. The model explains when the Gamma shape will dominate and when the Normal will determine the shape. One consequence of this understanding is that Gamma shapes are probably better for revenue management and Normal for spill modeling. However, it takes a compound process combining the two to generate all the observed characteristics of various cases. (C) 2002 Elsevier Science Ltd. All rights reserved.