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Discrete choice model for Amtrak Acela Express revenue management

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Abstract:

In this article, we propose a pricing strategy for Amtrak Acela Express focusing on business class passenger departing from Washington, DC. A two-step process is proposed to model passenger demand. In the first step, passenger choice model of booking time is estimated using a multinomial logit model. In the second step, a linear regression determines passenger demand in response to fare price; the effects of departure day of week and destination specific are incorporated. The proposed models, estimated on ticket reservation data, are incorporated into a non-linear programming problem to maximize expected revenue. The results indicate a potential for significant revenue improvements.

Document Type: Research Article

DOI: http://dx.doi.org/10.1057/rpm.2011.28

Affiliations: 1: Department of Civil & Environmental Engineering, University of Maryland, College Park, Maryland, USA 2: Performance Measurement, Marketing & Product Development, National Railroad Passenger Corporation (Amtrak), Washington, DC, USA

Publication date: November 1, 2011

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