Voluntary overbooking in commercial airline reservations

Doraid, Dalalah, Ojiako, Udi and Chipulu, Maxwell (2020) Voluntary overbooking in commercial airline reservations. Journal of Air Transport Management, 86, [101835]. (doi:10.1016/j.jairtraman.2020.101835).

Record type: Article

Abstract

This paper studies a voluntary overbooking model under rational expectation equilibrium to promote cooperation between customers and airlines, maintain goodwill of customers, and maximize the expected total returns to airlines. A decision tree analysis is constructed for both customers and airlines. Sensitivity analysis is conducted in both realistic and simulated no-show random variables for validation. The findings suggest considerable mutual benefits associated with a ‘voluntary overbooking’ policy that emphasizes mutual cooperation between passengers and commercial airlines. The main underlying assumption of the paper is that customers are willing to provide valuations to airlines seeking volunteers for overbooking. The originality of the proposed model is the incorporation of elements of the Rational expectations hypothesis into classical overbooking models gleaned from the literature.

Text

Dorrid et al 2020 Voluntary overbooking-JATM third rev_5th of april 2020 - Accepted Manuscript

Available under License Creative Commons Attribution Non-commercial No Derivatives.

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