The Impact of Passenger Diversion between Flights on the Optimal Protection Levels

摘要

In this paper, we extend Littlewood's Rule to the case of two flights which have the same fare structure, taking into account the passenger's possible diversions between flights, and study the impact of such diversions on the optimal protection levels of the foil-fare classes. When multi-flights are considered, the seats of different flights are somewhat substitutable with each other. The airline's objective is to maximize the total expected revenue. The results show that the passengers' diversion behavior has a bidirectional effect on the optimal protection levels of the full fare classes; the maximal expected revenue has a positive relationship with the diversion rates.