Optimal overbooking strategies in the airlines using dynamic programming approach in continuous time

The authors propose a novel approach to solve the long-standing challenge of airline overbooking management. They solve the problem using dynamic programming with an industrial setting characterised as near-to-perfect competition where airlines strategically overbook their flights to control their market shares instead of a more conventional setting with a revenue maximisation. The theorised optimisation problem is constructed using a terminal utility criterion and with the application of the Hamilton-Jacobi-Bellman equation. The analysis expands on four most commonly applicable overbooking strategies, and the results provide guidance on how airlines can choose a strategy to pursue an optimisation solution best suited to them.


  • English

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  • Accession Number: 01712824
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 29 2019 11:03AM