| Title: | Probabilistically Optimized Airline Overbooking Strategies, or "Anyone Willing to Take a Later Flight?!" |
| Authors: | Kevin Leder, Saverio Eric Spagnolie, Stefan Wild |
| Abstract: | We develop a series of mathematical models to investigate relationships between overbooking strategies and revenue. Our first models are static, in the sense that passenger behavior is predominantly time-independent; we use a binomial random variable to model consumer behavior. We construct an auction-style model for passenger compensation. Our second set of models is more dynamic, employing Poisson processes for continuous time-dependence on ticket purchasing/cancelling information. Finally, we consider the effects of the post-September 11 market on the industry. We consider a particular company and flight: Frontier Airlines Flight 502. Applying the models to revenue optimization leads to an optimal booking limit of 15% over flight capacity and potentially nets Frontier Airlines an additional $2.7 million/year on Flight 502, given sufficient ticket demand. |
| Keywords: | |
| Thanks: | This work was done for the 2002 International Mathematical Contest in Modeling |
| Status: | Received an
"Outstanding" Designation
Appeared in the Journal of Undergraduate Mathematics and Its Applications, Volume 23, Number 3, 2002. |
| Link: | [PDF] |
| BibTeX: | @inproceedings{KLSSSW02,
author = "Kevin Z. Leder and Saverio E. Spagniole and Stefan M. Wild",
title = {Probabilistically Optimized Airline Overbooking Strategies, or "Anyone Willing to Take a Later Flight?!"},
journal = "Journal of Undergraduate Mathematics and Its Applications",
year = "2002",
volume = "23",
number = "3",
pages = "37--338"
}
|