The Study Of Customers’ Bounded Rational Behavior And Utility Measurement Framework Under Revenue Management Environment

Revenue management was put forward by American Airlines to cope with fiercecompetition in the1970s. The traditional revenue management brought hugeeconomic interests for airlines, which was based on short-sighted customerassumption. Later customers were regarded to choose purchase time through theforecast of low fares’ reopen probability, reducing the aviation companies’ profits,who were considered absolutely rational. However, with the evolution of behavioraldecision theory, especially the wide application of prospect theory, we believe thatcustomers are bounded rational. The core contents and conclusions are as followed:Firstly, the ticket purchasing behavior of passengers conforms to principles whathave been discussed in prospect theory by Kahneman, such as loss aversion、diminishing sensitivity、context-dependence and risk aversion when earnings、riskseeking when losses; it’s also restricted to budget constraint, types of passengers andairline service quality, etc. It also implies different preferences and individualbehavior characteristics between different types of passengers.Secondly, this article constructs the factor index system of passengers’ ticketpurchase, which contains sixteen elements and two dimensions including productattributes and reference attributes; then uses the KANO model to classify factors,2ofwhich are must-be qualities(M): cabin services、 airport services;4areone-dimensional qualities(O): time convenience、personal experience、contextualofferings、perceived justification;6are attractive qualities(A): price、aircraft types、airline brand、free tickets and ufficio services, future availability, restrictive conditions;4are indifferent qualities(I): base airlines, semantic presentation, FFP, knowledge. Weget12elements products by excluding “I”, and also find out that business and leisuretravelers consider differently in5aspects.Thirdly, we build up the utility measurement framework of tickets’ purchasing forpassengers, which includes not only the effectiveness of traditional products expectedutility, but also includes the regulation of reference utility. Products expected utilityresults from the comprehensive assessment of various product attributes bypassengers, and reference utility results from the passengers’ perception towardsreference attributes.