calculated either with network optimization tools orleg-based heuristics such as EMSR approaches. Talluriand van Ryzin (1999b) have done much work onnetwork bid price control andidentify the conditionsunder which this approach provides revenue
optimality, while de Boer et al. (2002) compare theperformance of deterministic and stochastic networkformulations for O-D control.Until recently, relatively few airlines had implementednetwork optimization models for dynamiccalculation of displacement costs and/or bid pricesfor O-D control. Because most reservations systemsand, in turn, third-generation RM systems weredeveloped on the basis of leg/fare class data, mostairlines did not have access to the detailed historicalODIF booking data required by network optimizationmodels. Use of large-scale network optimizationmodels also raised technical and computational issuesrelated to the solution times and frequency of reoptimization.However, with the development of airline
databases designed to capture detailed ODIF historicaldata, along with advances in both solution algorithmsand computational speeds, network revenuemanagement has been implemented by over a dozenairlines in different parts of the world.The benefits of leg-based revenue management
and incremental benefit of O-D controls over legbasedfare class controls have been estimated by
several researchers through simulation. For example,Williamson (1992) developed a network revenue managementsimulation approach that allowed differentschemes for optimization and control of seat inventoriesto be tested. An even more realistic approachto simulating the impacts of different RM schemes ina full-scale, competitive airline network environment
is that of the passenger origin-destination simulator(PODS). Developed originally by researchers at Boeing(Hopperstad 1997), PODShas been enhanced torealistically simulate large networks in which competingairlines generate RM forecasts and set seat inventorycontrols based on “historical” (i.e., previouslysimulated) data. At the same time, the simulated passengers
in PODSchoose among alternative airlines,fares, restrictions, schedules, and seat inventory availabilityas established by each airline’s own RM system.
PODShas been used to simulate the competitive