The primary component of reservations control is seat inventory control. Traditionally, airline seat inventory control has been the practice of allocating seats to different fare classes in an effort to maximize the expected revenue of future scheduled flights. This is done by protecting seats for higher fare passengers, while at the same time making empty seats available to lower fare passengers.
The need for seat inventory control stems from the basic problem that airline supply does not equal demand. In air transportation, supply and demand seldom match exactly. On the one hand, demand for future flights is probabilistic and cannot be forecasted precisely. However, the problem results, to a greater extent, from the actual scheduling of aircraft. Because of the route structure of an airline, the relatively fixed number and size of aircraft, scheduling constraints, and the lack of balance in passenger demands over a network, it is not always possible to schedule exactly the right aircraft for each departure. Therefore, when there is either excess demand or excess capacity, a closer match between supply and demand can be achieved through the use of seat inventory control techniques.
The greater the problem of matching the supply of aircraft seats to the demand of different routes, the greater the benefits of effective seat inventory control.
The seat inventory control problem can be approached from a variety of perspectives. Seat inventories can be controlled over individual flight legs, over the entire network of a carrier, or over separate subsets of the network.
Airline Network Seat Inventory Control: Methodologies and Revenue Impacts. Elisabeth L. Williamson