Abstract
In today's competitive market of the civil aviation industry,overbooking has been a common strategy for airlines to deal withuncertainty. However, while raising the overbooking level couldrecover partial losses caused by cancelation and no-show, thispolicy would bring more uncertainty into the system. As a solution,a new method of 'transference' has recently been implemented bysome major airlines in China. This method allows some of theoverflowed passengers resulting from overbooking to board on a laterflight with certain compensation. When it is properly implemented,airline companies could enjoy reduced uncertainty and improvedrevenue. In this paper, we build a model to depict this method,design a procedure to determine the optimal transferring quantityamong flights of different departure times, analyze the overbookinglevel of each flight, and show improved revenue under the method of'transference'. We also present a numerical example to highlightthat our results may coincide with reality.
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