# US 8,543,433 B1 · System and method for real-time revenue management

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- Number: US 8,543,433 B1
- Document ID: US8543433B1
- Status: Granted
- Kind: B1
- Application number: 13/462,334
- Filed: 2012-05-02
- Granted: 2013-09-24
- Earliest claimed: 2004-02-27
- Assignees: American Airlines, Inc.
- Applicants: Raymond Scott Chandler; Shau-shiang Ja; Timothy Lee Jacobs
- Inventors: Raymond Scott Chandler; Shau-shiang Ja; Timothy Lee Jacobs
- Web page: https://patentgrep.com/patent/US8543433B1

## CPC

- G06Q 10/02: Reservations, e.g. for tickets, services or events
- G06Q 10/021: {Re-booking existing reservations}
- G06Q 10/0283: {for travel seating}
- G06Q: INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR

## Abstract

A system and method for real-time revenue management is provided. Data is received from a scheduling system pertaining to a network comprising a plurality of legs. A sub-network within the network may be identified, and optimization of the sub-network is triggered. A current inventory information value attributable to the identified sub-network is pro-rated, and an expected traffic value for the identified sub-network is calculated using a forecast of the expected demand, a standard deviation of the demand, a gamma distribution equation, and an unsatisfied demand value. An updated inventory information value for the identified sub-network is generated using the pro-rated inventory information value and an optimization equation, wherein the optimization equation generates a maximum revenue value by adjusting the expected traffic, and the updated inventory information value is transmitted to the scheduling system.

## Claims

### Claim 1

A method of determining respective minimum fares at which to offer respective seats associated with respective ones of a plurality of air travel itineraries, each respective seat belonging to a first fare class of seats associated with one of the air travel itineraries, the plurality of air travel itineraries comprising:
a first air travel itinerary from a first destination to a second destination, the first air travel itinerary having:
a first fare for each seat that belongs to the first fare class of seats associated with the first air travel itinerary; and
a first leg from the first destination to the second destination, the first leg having a first remaining capacity of seats and an initial first bid price;
a second air travel itinerary from the first destination to the third destination, the second air travel itinerary having:
a second fare for each seat that belongs to the first fare class of seats associated with the second air travel itinerary;
the first leg from the first destination to the second destination; and
a second leg from the second destination to the third destination, the second leg having a second remaining capacity of seats and an initial second bid price;
a third air travel itinerary from the first destination to a fourth destination, the third air travel itinerary having:
a third fare for each seat that belongs to the first fare class of seats associated with the third air travel itinerary;
the first leg from the first destination to the second destination; and
a third leg from the second destination to the fourth destination, the third leg having a third remaining capacity of seats and an initial third bid price;
and
a fourth air travel itinerary from the second destination to the third destination, the fourth air travel itinerary having:
a fourth fare for each seat that belongs to the first fare class of seats associated with the fourth air travel itinerary; and
the second leg from the second destination to the third destination;
the method comprising:
providing a node, the node comprising:
a computer processor;
a storage device; and
a plurality of instructions stored in the storage device and executable by the computer processor;
detecting an airline flight booking, the airline flight booking being associated with the fourth air travel itinerary and thus the airline flight booking resulting in a change to the second remaining capacity of the second leg;
and
executing the plurality of instructions with the computer processor so that the following steps are executed:
pro-rating the third fare of the third air travel itinerary to determine a pro-rated third fare associated with the first leg;
optimizing respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries, comprising:
(a) altering the initial first bid price and the initial second bid price to thereby alter the respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries;
(b) during altering the initial first bid price and the initial second bid price, preventing a number of seats to be made available on the first leg, as a result of altering the respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries, from being greater than the first remaining capacity of seats on the first leg;
(c) during altering the initial first bid price and the initial second bid price, preventing a number of seats to be made available on the second leg, as a result of altering the respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries, from being greater than the changed second remaining capacity of seats on the second leg;
and
(d) repeating (a), (b) and (c) until a maximum revenue is obtained.

### Claim 2 (depends on 1)

The method of claim 1 wherein the maximum revenue equals the sum of at least:
the first fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the first travel itinerary;
the second fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the second air travel itinerary;
the pro-rated third fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the third air travel itinerary; and
the fourth fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the fourth air travel itinerary.

### Claim 3 (depends on 1)

The method of claim 1 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the first travel itinerary is equal to the altered first bid price that corresponds to the maximum revenue.

### Claim 4 (depends on 1)

The method of claim 1 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the second travel itinerary is equal to the sum of:
the altered first bid price that corresponds to the maximum revenue, and
the altered second bid price that corresponds to the maximum revenue.

### Claim 5 (depends on 1)

The method of claim 1 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the third travel itinerary is equal to the sum of:
the altered first bid price that corresponds to the maximum revenue, and
the initial third bid price.

### Claim 6 (depends on 1)

The method of claim 1 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the fourth travel itinerary is equal to the altered second bid price that corresponds to the maximum revenue.

### Claim 7 (depends on 1)

The method of claim 1 wherein the plurality of air travel itineraries further comprises a fifth air travel itinerary from the second destination to the fourth destination, the fifth air travel itinerary having:
a fifth fare for each seat that belongs to the first fare class of seats associated with the fifth air travel itinerary; and
the third leg from the second destination to the fourth destination;
and
wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the fifth travel itinerary is equal to the initial third bid price.

### Claim 8 (depends on 1)

The method of claim 1 wherein pro-rating the third fare of the third air travel itinerary to determine the pro-rated third fare associated with the first leg comprises:
multiplying the third fare by the quotient of the initial first bid price divided by the sum of the initial first bid price and the initial third bid price.

### Claim 9 (depends on 1)

The method of claim 1 wherein pro-rating the third fare of the third air travel itinerary to determine the pro-rated third fare associated with the first leg comprises:
subtracting the initial third bid price from the third fare.

### Claim 10

A computer-readable medium comprising a series of instructions for execution by at least one computer processor, wherein the series of instructions are for determining respective minimum fares at which to offer respective seats associated with respective ones of a plurality of air travel itineraries, each respective seat belonging to a first fare class of seats associated with one of the air travel itineraries, the plurality of air travel itineraries comprising:
a first air travel itinerary from a first destination to a second destination, the first air travel itinerary having:
a first fare for each seat that belongs to the first fare class of seats associated with the first air travel itinerary; and
a first leg from the first destination to the second destination, the first leg having a first remaining capacity of seats and an initial first bid price;
a second air travel itinerary from the first destination to the third destination, the second air travel itinerary having:
a second fare for each seat that belongs to the first fare class of seats associated with the second air travel itinerary;
the first leg from the first destination to the second destination; and
a second leg from the second destination to the third destination, the second leg having a second remaining capacity of seats and an initial second bid price;
a third air travel itinerary from the first destination to a fourth destination, the third air travel itinerary having:
a third fare for each seat that belongs to the first fare class of seats associated with the third air travel itinerary;
the first leg from the first destination to the second destination; and
a third leg from the second destination to the fourth destination, the third leg having a third remaining capacity of seats and an initial third bid price;
and
a fourth air travel itinerary from the second destination to the third destination, the fourth air travel itinerary having:
a fourth fare for each seat that belongs to the first fare class of seats associated with the fourth air travel itinerary; and
the second leg from the second destination to the third destination;
the series of instructions comprising:
instructions for detecting an airline flight booking, the airline flight booking being associated with the fourth air travel itinerary and thus the airline flight booking resulting in a change to the second remaining capacity of the second leg;
instructions for pro-rating the third fare of the third air travel itinerary to determine a pro-rated third fare associated with the first leg;
and
instructions for optimizing respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries, comprising instructions for:
(a) altering the initial first bid price and the initial second bid price to thereby alter the respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries;
(b) during altering the initial first bid price and the initial second bid price, preventing a number of seats to be made available on the first leg, as a result of altering the respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries, from being greater than the first remaining capacity of seats on the first leg;
(c) during altering the initial first bid price and the initial second bid price, preventing a number of seats to be made available on the second leg, as a result of altering the respective numbers of seats expected to be allocated to the respective first fare classes associated with the first, second, third and fourth air travel itineraries, from being greater than the changed second remaining capacity of seats on the second leg;
and
(d) repeating (a), (b) and (c) until a maximum revenue is obtained.

### Claim 11 (depends on 10)

The computer-readable medium of claim 10 wherein the maximum revenue equals the sum of at least:
the first fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the first travel itinerary;
the second fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the second air travel itinerary;
the pro-rated third fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the third air travel itinerary; and
the fourth fare multiplied by the optimized number of seats expected to be allocated to the first fare class associated with the fourth air travel itinerary.

### Claim 12 (depends on 10)

The computer-readable medium of claim 10 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the first travel itinerary is equal to the altered first bid price that corresponds to the maximum revenue.

### Claim 13 (depends on 10)

The computer-readable medium of claim 10 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the second travel itinerary is equal to the sum of:
the altered first bid price that corresponds to the maximum revenue, and
the altered second bid price that corresponds to the maximum revenue.

### Claim 14 (depends on 10)

The computer-readable medium of claim 10 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the third travel itinerary is equal to the sum of:
the altered first bid price that corresponds to the maximum revenue, and
the initial third bid price.

### Claim 15 (depends on 10)

The computer-readable medium of claim 10 wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the fourth travel itinerary is equal to the altered second bid price that corresponds to the maximum revenue.

### Claim 16 (depends on 10)

The computer-readable medium of claim 10 wherein the plurality of air travel itineraries further comprises a fifth air travel itinerary from the second destination to the fourth destination, the fifth air travel itinerary having:
a fifth fare for each seat that belongs to the first fare class of seats associated with the fifth air travel itinerary; and
the third leg from the second destination to the fourth destination;
and
wherein the minimum fare at which to offer a seat that belongs to the first fare class associated with the fifth travel itinerary is equal to the initial third bid price.

### Claim 17 (depends on 10)

The computer-readable medium of claim 10 wherein instructions for pro-rating the third fare of the third air travel itinerary to determine the pro-rated third fare associated with the first leg comprise:
instructions for multiplying the third fare by the quotient of the initial first bid price divided by the sum of the initial first bid price and the initial third bid price.

### Claim 18 (depends on 10)

The computer-readable medium of claim 10 wherein instructions for pro-rating the third fare of the third air travel itinerary to determine the pro-rated third fare associated with the first leg comprise:
instructions for subtracting the initial third bid price from the third fare.