OVERBOOKING AND UPGRADE SOLUTION METHODS AND SYSTEMS
A computer based system for maximizing revenue by determining an optimal quantity of a product to be sold is disclosed. The system determines the optimal number of seats to be sold for a flight based upon the flight's capacity and forecasted costs associated with the flight. The forecasting is based upon probabilistic distribution models takes into account passenger itinerary data, passenger and market historical data, whether a passenger has flown on a previous leg of an itinerary, the ripple denied boarding effect of reaccommodating a denied passenger. The system evaluates the potential effect of double selling a unit of inventory (e.g., seats). Downstream inventory control, revenue management and reservations systems may use the optimization data to affect the operation of the airline.
1 . A system comprising:
a network interface communicating with a memory;
the memory communicating with a processor for enabling revenue maximization;
the processor, when executing a computer program, executes operations comprising:
obtaining, by the processor, an achievable coach seat demand for a flight (demand coach ) of an airplane, wherein the airplane is comprised of a plurality of seats, and wherein the seats are associated with at least one of a first class of service (first) and a second class of service (coach); and
executing, by the processor, an upgrade analysis to determine that an upgrade seat should be sold, the upgrade process comprising:
determining, by the processor, that there is excess demand coach ;
determining, by the processor, an expected marginal seat revenue for a sale of an additional first class seat (EMSR first ) on the flight;
determining, by the processor, an expected marginal seat revenue for a sale of an additional coach seat (EMSR coach ) on the flight; and
in response to determining, by the processor, that EMSR coach >EMSR first , updating an upgrade authorization parameter indicating that an additional upgrade seat on the flight should be offered for sale.
2 . The system of claim 1 , wherein achievable demand coach equals a bookings for coach seats plus a demand for coach seats for a timeframe from an analysis date to a date of departure of the flight.
3 . The system of claim 1 , wherein the determining that there is excess demand coach comprises determining that the achievable demand coach >the total number of seats in coach (CAP).
4 . The system of claim 1 , wherein EMSR coach =a seat coach demand price×a probability that seat coach will be sold.
5 . The system of claim 4 , wherein EMSR first =a seat first demand price×a probability that seat first will be sold.
6 . The system of claim 5 , wherein at least one of the search coach demand price and the seat first demand price is obtained from at least one of a pricing system and a revenue management system.
7 . The system of claim 5 , wherein at least one of the seat coach demand price and the seat first demand price is determined based upon a timeframe from an analysis date to a date of departure of the flight.
8 . The system of claim 3 , the operations further comprising repeating the upgrade process until at least one of:
EMSR coach <=EMSR first to determine a total number of upgrade seats to be sold for the flight (total upgrade seats):
the total upgrade seats>=a predetermined maximum;
the total upgrade seats>=a predetermined percentage of the total number of seats in coach (CAP); and
the total upgrade seats>=a predetermined percentage of the total number of seats in first class.
9 . The system of claim 8 , the operations further comprising determining an optimal time to authorize the total number of upgrade seats to be sold and, at the optimal time, updating the upgrade authorization parameter to equal the total upgrade seats.
10 . The system of claim 9 , wherein the determining the optimal time comprises determining that achievable demand coach <=an authorized number of seats to be sold in coach (AU)+total upgrade seats.
11 . The system of claim 10 , wherein the achievable demand coach is adjusted to account for an error in a forecast, wherein the achievable demand is based upon the forecast.
12 . The system of claim 10 , wherein AU is determined as an optimal AU that minimizes an overbooking cost associated with the flight based upon a CAP, an NSF, a spoiled seat cost and a denied boarding cost, wherein the denied boarding cost is dynamically calculated based upon the a plurality of forecasts determining a re-accommodation cost for each of a plurality of denied passengers for the flight.
13 . The system of claim 12 , the operations further comprising obtaining the CAP and the NSF for the flight.
14 . The system of claim 12 , wherein the NSF is determined based upon a next active leg analysis.
15 . The system of claim 1 , the operations further comprising determining that the risk of a double sell is greater than an acceptable risk threshold.
16 . The system of claim 14 , the operations further comprising determining the risk of the double sell as the joint probability that the additional first class seat will be sold as a first class seat and that the additional first class seat will be sold as a coach seat.
17 . The system of claim 10 , the operations further comprising mitigating the risk of a double sell by periodically repeating the upgrade process to calculate an adjustment to the total upgrade seats.
18 . The system of claim 17 , wherein the frequency of the repeating increases as the timeframe before departure decreases.
19 . The system of claim 17 , the operations further comprising mitigating the risk of the double sell by adjusting the upgrade seat total so that the upgrade seat total is less than at least one of a predetermined number and a predetermined percent of a total number of first class seats.
20 . A computer-based method, comprising:
obtaining, by a revenue maximization computer, an achievable coach seat demand for a flight (demand coach ) of an airplane, wherein the airplane is comprised of a plurality of seats, and wherein the seats are associated with at least one of a first class of service (first) and a second class of service (coach); and
executing, by the computer, an upgrade analysis to determine that an upgrade seat should be sold, the upgrade process comprising:
determining, by the computer, that there is excess demand coach ;
determining, by the computer, an expected marginal seat revenue for a sale of a first class seat (EMSR first ) on the flight;
determining, by the computer, an expected marginal seat revenue for a sale of a coach seat (EMSR coach ) on the flight; and
in response to determining that EMSR coach >EMSR first , updating, by the computer, an upgrade authorization parameter indicating that an additional upgrade seat on the flight should be offered for sale.