An Airline Overbooking Policy

E. Shlifer and Y. Vardi
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E. Shlifer: Technion, Haifa, Israel
Y. Vardi: Technion, Haifa, Israel

Transportation Science, 1975, vol. 9, issue 2, 101-114

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.

Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:9:y:1975:i:2:p:101-114

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