JIMO
Analysis of airline seat control with region factor
Yanming Ge
Due to the lower consumption level to the flights in some regions, the flights' vacancy rate is usually very high and the service level is low. To airlines, the common procedure to handle such problems is to employ different price systems. But this in return results in unsatisfying effects. In this paper we discussed the above issue from another standpoint. Firstly, we introduced a parameter, called region factor, and then constructed a stochastic dynamic model of a single-leg flight related to it. Secondly, we derived some monotone properties for the expected revenue functions. These properties ensured that we could choose appropriate region factor to recover the high vacancy rate caused by the lower consumption levels, but also adopt the similar optimal threshold control strategy as the traditional revenue management did. Furthermore, in addition to improving the service levels, the proper region factor can increase the total revenue sometimes. Lastly, Numerical results were used to illustrate properties of the model.
keywords: region factor. dynamic programming OR in airlines Revenue management
JIMO
Overbooking with transference option for flights
Yanming Ge Ziwen Yin Yifan Xu
In today's competitive market of the civil aviation industry, overbooking has been a common strategy for airlines to deal with uncertainty. However, while raising the overbooking level could recover partial losses caused by cancelation and no-show, this policy would bring more uncertainty into the system. As a solution, a new method of "transference" has recently been implemented by some major airlines in China. This method allows some of the overflowed passengers resulting from overbooking to board on a later flight with certain compensation. When it is properly implemented, airline companies could enjoy reduced uncertainty and improved revenue. In this paper, we build a model to depict this method, design a procedure to determine the optimal transferring quantity among flights of different departure times, analyze the overbooking level of each flight, and show improved revenue under the method of "transference". We also present a numerical example to highlight that our results may coincide with reality.
keywords: transference point process intensity control. overbooking Revenue management

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