Anyone who's paid $800 for an airline seat at the last minuteonly to discover that the guy in the next seat paid $200 has just had the first lesson in airline yield management. It's an arcane science of global importance as airlines fight for profitability. At Sabre Inc.'s airline-reservation network, it looks like things are getting a bit more scientific and a bit less arcane.

As Sabre's new chief scientist, Barry Smith takes one part artificial intelligence and one part operations research and conjures up a formula that fills every seat for the highest possible fare. Smith's formula eventually will let airlines compete with buses for low fares. It'll also be smart enough to hold a sufficient number of seats to meet the demand of travelers willing to pay top dollar at the last minute.

Smith heads Sabre's Research Group, which carries out proof-of-concept projects in optimization, forecasting, and algorithms. The group is working on three initiatives for 20 Sabre customers: improving forecast accuracy, coordinating multiple distribution channels, and improving integration of yield-management with flight scheduling and operations. On the cutting edge is research that combines artificial intelligence and operations research. The goal is to produce systems that search thousands of combinations to find the lowest fares for a number of travel Web sites.

Smith says the Research Group's efforts will include improvements in forecasting, where as a general rule a 10% improvement advances an airline's profitability between 0.5% and 1%.

Another hot topic is "robust planning," which optimizes airline schedules and efficiency. For the past 20 years, airlines have used models that show the optimum deployment under normal conditions to make flight schedules, Smith says. But travelers know that when it comes to putting people in planes, plans often go awry. "We're trying to figure out how to put some flexibility back in airline schedules," he says, "and how to deal with air-traffic-control problems, weather problems, and crews getting sick without giving away a significant amount of revenue." Weary travelers hope Smith will have some answers soon.