The Optimal Airline Overbooking Strategy Under Uncertainties

Determining proper overbooking strategy is important for airlines yield management. However various uncertainties arisen from weather, competitor’s strategies, market demands, and so on, complicate such a decision. This research proposes a method to determine the most suitable overbooking strategy allowed with the consideration of companion uncertainties. This research adopts system simulation and a meta-heuristic search mechanism to find the optimal overbooking strategy based on a given pricing strategy with one target competitor. The experiment results indicate that the proposed approach is able to effectively determine the optimal overbooking strategy among different market scenarios under uncertainties.

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