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Purpose Airlines use various analytical techniques to optimally control seats in its various fare classes. Most literature on inventory control does not discuss policies for group arrivals. This study aims to address the literature gap in determining an optimal booking policy which considers the dynamics of group behaviour with respect to cancellations and refunds. Design/methodology/approach An analytical model by which bid price control mechanism can be applied to group bookings is developed through this study. Findings Numerical experiments are performed to demonstrate the analytical model under various scenarios. A comparison of the model with the traditional model indicates an increase in the total revenue generated. Originality/value The novelty of this work is in modelling the dynamics of group behaviour in a network of flights, and it contributes to the literature on revenue management.

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