Passenger Choice Analysis for Seat Capacity Control: A Pilot Project in Scandinavian Airlines

A yield management research project in Scandinavian Airlines System (SAS) focuses upon passenger preferences in situations where the preferred flight, class alternative is sold out. The passenger then could deviate to a competitor; be recaptured onto another SAS flight; or pay the higher fare on a higher booking class (be a buyup). Class allocations possibly should reflect preferences for such options, particularly when prices are becoming operational control variables. Passenger preferences were estimated from choice analyses of interviews and logged bookings transactions. Needs of developing SAS present origin-to-destination heuristic were identified, and alternatives for revising the class allocation models were assessed. Issues to be resolved prior to an implementation were identified.