Hybrid nesting control strategy for passenger railway with one‐seat‐one‐ticket restriction

Abstract

Nesting control is one of the most prevalent quantity‐based controls for the revenue management problem. A popular nesting control strategy for multi‐resource problem is the virtual nesting control, which sets nested booking limits on each resource. However, this control was originally developed for the airline and cannot be directly used in the passenger railway with one‐seat‐one‐ticket restriction. Therefore, this paper develops a new nesting control that is applicable to the railway. The proposed control can nest the capacity over different fare classes and origin‐destination pairs, which overcomes the shortcomings of existing railway booking‐limit controls. Numerical experiments are conducted in various scenarios to evaluate the performance. The results show that the hybrid nesting control outperforms the others in all situations. In addition, the revenue improvement increases with the randomness of demand and discount percentage.