The effects of inventory control and denied boarding on customer satisfaction: The case of capacity-based airline revenue management

Abstract

This paper examines on the extent to which seat inventory control and denied boarding influence customer satisfaction. The effects of these core components of revenue management were analyzed within dummy regression models and ANOVAs. Our empirical analyses show that the effect of seat inventory control varies across booking classes. Reactions to cross-individual price differences caused by seat inventory control were more distinct in lower-priced booking classes. The same did not hold true for the impact of denied boarding on customer satisfaction, however, where there was no variation across booking classes. Furthermore, we found that favorable deviations from expected service performance (e.g. favorable cross-individual price differences) did not result in distinct satisfaction responses. Thus it must be assumed that revenue management practices have a net negative effect on customer satisfaction. Based on the results of the empirical analyses, implications for management and starting points for further research are presented.