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An Airline Overbooking Policy

Author

Listed:
  • E. Shlifer

    (Technion, Haifa, Israel)

  • Y. Vardi

    (Technion, Haifa, Israel)

Abstract

The paper presents a model for determining an overbooking policy for an airline. Of the three criteria chosen, the first two ensure that the probability of a rejection and the expected rejection level do not exceed given limits, and the third determines the loss incurred by rejecting a passenger relative to the profit of carrying one, thereby permitting maximization of the expected gain. The following three cases are considered: (a) Single-leg flight carrying a single type of passenger; (b) Single-leg flight carrying two types of passengers, and (c) Two-leg flight. It is assumed that all types of passengers generate the same profit for a given flight-leg, and differ only in probability of cancellation.

Suggested Citation

  • E. Shlifer & Y. Vardi, 1975. "An Airline Overbooking Policy," Transportation Science, INFORMS, vol. 9(2), pages 101-114, May.
    • Handle: RePEc:inm:ortrsc:v:9:y:1975:i:2:p:101-114
    DOI: 10.1287/trsc.9.2.101
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    Cited by:

    1. Ming Xu & Yan Jiao & Xiaoming Li & Qingfeng Cao & Xiaoyang Wang, 2015. "A Multi-Period Optimization Model for Service Providers Using Online Reservation Systems: An Application to Hotels," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-18, July.
    2. Ma, Jie & Tse, Ying Kei & Wang, Xiaojun & Zhang, Minhao, 2019. "Examining customer perception and behaviour through social media research – An empirical study of the United Airlines overbooking crisis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 192-205.
    3. Lan, Yingjie & Ball, Michael O. & Karaesmen, Itir Z. & Zhang, Jean X. & Liu, Gloria X., 2015. "Analysis of seat allocation and overbooking decisions with hybrid information," European Journal of Operational Research, Elsevier, vol. 240(2), pages 493-504.
    4. Syed Asif Raza & Rafi Ashrafi & Ali Akgunduz, 2020. "A bibliometric analysis of revenue management in airline industry," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 436-465, December.
    5. Jeffrey I. McGill & Garrett J. van Ryzin, 1999. "Revenue Management: Research Overview and Prospects," Transportation Science, INFORMS, vol. 33(2), pages 233-256, May.
    6. William L. Cooper & Tito Homem-de-Mello & Anton J. Kleywegt, 2006. "Models of the Spiral-Down Effect in Revenue Management," Operations Research, INFORMS, vol. 54(5), pages 968-987, October.
    7. H Xiong & J Xie & X Deng, 2011. "Risk-averse decision making in overbooking problem," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(9), pages 1655-1665, September.
    8. Richard E. Chatwin, 1996. "Multi‐period airline overbooking with multiple fare classes," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(5), pages 603-612, August.
    9. Z.F. Li, Michael & Hoon Oum, Tae, 2000. "Airline spill analysis - beyond the normal demand," European Journal of Operational Research, Elsevier, vol. 125(1), pages 205-215, August.
    10. Luo, Sirong & Çakany?ld?r?m, Metin & Kasilingam, Raja G., 2009. "Two-dimensional cargo overbooking models," European Journal of Operational Research, Elsevier, vol. 197(3), pages 862-883, September.
    11. Itir Karaesmen & Garrett van Ryzin, 2004. "Overbooking with Substitutable Inventory Classes," Operations Research, INFORMS, vol. 52(1), pages 83-104, February.
    12. Robert Hjorth & Thomas Fiig & Jesper Larsen & Nicolas Bondoux, 2018. "Joint overbooking and seat allocation for fare families," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(6), pages 436-452, December.

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