25. Yield management method optimizing discount ticket sales quota

One approach for increasing the revenue of railway undertakings has been to adopt yield management techniques, by setting a quota for discount ticket sales of reserved seats on express trains.
However, the difficulty with this method lies in how to quantify its effect on revenue, and how to calculate the optimum sales quota for revenue maximization.
Therefore, a method was developed to calculate the optimum sales quota, incorporating demand estimation for various discount tickets and the behavior of passengers purchasing the next-best-option when they are unable to buy their first-choice ticket (Fig.1).

Demand estimation for discount tickets projects ticket sales per train, segment of journey, ticket type and time of booking, based on past sales data according to date. Passenger ticket selection behavior was modelled on the results from a questionnaire, where imaginary passengers were asked what their second choice of ticket would be when their first choice was no longer available: decide to choose an earlier train, a later train, a higher-priced ticket on the same train, or abandon the train journey. This model shows how difference in price between ticket types and time between trains influences passenger choice of ticket. This method was integrated into a system, which can calculate the ticket sales quota and support the decision-process for setting the quota (Fig.2).

This method and system were then applied to ticket sales for a particular express train line as a pilot test by inputting the calculated sales quota into the actual seat reservation system.
The result demonstrated that, which may include other effects, the calculated quota increased revenue by approximately 5 to 11% compared to manually-set quotas.

This method supports the decision-making process for setting the discount ticket sales quota, making it possible to maximize revenue and facilitate decision-making.