A quantitative approach to determine a corporate's optimal seat upgrading policy of air travels

Abstract

This paper proposes a constraint-free model and a budget-constrained model to determine the optimal air travel policy in terms of the seat upgrading. The approach strikes a balance between cost-saving and the boosted productivity by upgrading the employees to higher classes. We specify a benefit function based on the Hensher Equation's core idea and leverage economics assumptions of the marginal productivity of labor. The study fills the blank of the literature in terms of modelling framework, and the usage of a large multinational company's booking records to solve for an exemplary optimal travel policy.