Overbooking with bilateral transference in parallel flights

Abstract

In the civil aviation market, overbooking has been a common approach for airlines to recover losses caused by cancelation and no-shows. However, overbooking would bring even more uncertainty into the system sometimes. As a solution, a new policy named transference is being implemented among flights in the route between Shanghai and Beijing by lots of airlines such as China Eastern Airlines, China Southern Airlines and Shanghai Airlines. This policy enables overflow passengers resulted from overbooking to take a later flight with a certain amount of compensations, while passengers who arrive at the airport ahead of their schedule to board any early flights with surplus capacity freely. As a result, the uncertainty is decreased while the revenue is increased. In this paper, we establish a model to describe the situation, design a procedure to handle two key problems in the model: the optimal transferring quantity among flights with different departure times and the overbooking limit of each flight, and show the revenue situation under the policy. At the end of the paper, we present a numerical example which shows our results coincide with reality.