6/14/2023 Cassandra Smith
Written by Cassandra Smith
An ISE professor’s group won third place in the Institute of Industrial & Systems Engineers (IISE) Outstanding Innovation in Service Systems Engineering Award.
Lavanya Marla, a professor of industrial and enterprise systems engineering, said her team won this honor for their project on airline ancillaries -- extra amenities that can be added on to base airfare.
“Ancillaries are a rapidly growing source of airplane revenues, yet their prices are currently statically determined using rules-of-thumb and are matched only to the average customer or to customer groups,” said Marla in a description of their project, “Deepair Improves Airline Ancillary Revenues with Personalized Pricing.” The team believes offering ancillaries priced in a manner personalized to individual customer needs improves both customer acceptability and increases airline revenue.
Their project uses novel machine learning methods to implement personalized ancillary pricing live, in partnership with a European airline. The models, which are GDPR compliant, use information from each individual shopping session to recommend personalized ancillary price points.
They used several different approaches with increasing levels of sophistication. Those included a two-stage forecasting and optimization model using a logistic mapping function; a two-stage model that uses a deep neural network for forecasting, coupled with a revenue maximization technique using discrete exhaustive search; and a single-stage end-to-end deep neural network that recommends the optimal price, and enforces economic properties such as monotonicity.
For the competition, Marla presented on behalf of the team (Naman Shukla, Akhil Gupta, Kartik Yellepeddi, and Arinbjorn Kolbeinsson)during an award session at the IISE annual conference in May in New Orleans.