Comparative analysis on one-leg airline capacity control models with overbooking

Based on the theories of Markov decision processes (MDP) and robust optimization, a robust capacity control model based overbooking and group booking of single-leg flight (abbreviated as R-MDP) is set up. At the same time, the nominal MDP model and the modified expected marginal seat revenue (EMSR) model which ignore the estimation error are also provided. Numerical results illustrate that the robust model can significantly improve the expected revenue when demand estimation errors exist, and the robust strategy performs better than the nominal strategy when the estimation error is bigger. Numerical examples also reveal that the smaller the number of remaining seats or the longer the remaining time, the better performance the robust strategy will be.