A STATIC OVERBOOKING MODEL IN SINGLE LEG FLIGHT REVENUE MANAGEMENT 

Behrooz Pourghannad
Mathematics, MSc. Thesis, 2013 

Thesis Jury
Assoc. Prof. Semih Onur Sezer (Thesis Supervisor), Assoc. Prof. Hans Frenk, Prof. Dr. Albert Erkip, Assoc. Prof. Nilay Noyan, Assoc. Prof. Ahmet Barış Balcıoğlu  

Date &Time: June, 24th, 2013 – 13:40

Place: FENS G032 

Keywords: Optimization, Airline revenue management, Poisson processes

Abstract

In this thesis, we present a static single leg airline revenue management model with overbooking. In this model it is assumed that the requests for different fare class tickets arrive according to independent nonhomogeneous Poisson processes. Each accepted request may cancel its reservation before departure, and at the departure time no-shows may occur. In this setup, a static policy is given by an m-dimensional vector of which the ith component represents the closing time for fare class i. Among those policies we determine the policy with the highest expected revenue. As such this model can be seen as the static counter part of a dynamic continuous time airline overbooking model. It can also be considered as an alternative for the well-known EMSR heuristics. We discuss the performance of the optimal static policy and compare it with the alternative EMSR and dynamic policies.