Abstract: The current situation and the history of two-fare-class seat inventory control problem for the airline yield management in air transportation of the passengers are first overviewed. Then a new marginal analytical method determining the optimal allotment for two-class problem is presented, with an emphasis on the theoretical aspects of the problem as compared with the traditional formulae. Based on the fact that the passengers' demand number is a discrete random variable the formula deduction is demonstrated in detail. The formula obtained in this paper which shows that the optimal seat allotment relates to the distributions of both high-fare demand and low-fare one has made the important corrections for the traditional formulae in this field. Contrasting the formula deduced in the paper with the traditional formulae it can be shown by the results of the computational example with the new formula that the method is more accurate and practical.

Key words: airline yield management, seat inventory control, marginal analysis