Cost & revenue management - adaptive airline overbooking approach

With the ease of access to information and technological facilities, competition in the markets has increased. Accordingly, companies have to be active in this competition in different ways in order to take a strong stance against their competitors in the market and to act with appropriate strategies against possible changes in the sector. Companies look for alternative ways to strengthen their positions compared to their competitors do not want to compromise on profitability. Airline companies, which are a current example of this situation, have recently started to look for ways to increase their revenues as well as reduce expenses in order to increase their profitability. Any service that is perishable, such as aircraft seats, cannot be sold over time or empty when time passes, leads to loss of income. As a result, they aim to reach the maximum profit by optimizing the inputs thanks to the revenue management systems developed to solve this problem. Revenue management systems, which are utilized to achieve maximum revenue from services provided with fixed capacity, are based on demand and segmentation of the market. Aim is to set optimum prices by systematically evaluating demand and fixed capacity. This study includes cost and revenue management, optimization of the sale of aircraft seats to multiple passengers (overbooking), which is one of the revenue management approaches, and an artificial intelligence estimation. After conducting a study on the data of an airline company's flights between 2015-2019, on which day, and in which season, and on data of the same flight in the previous year, it was seen that the overbooking process prevented loss of income and increased revenue as a result of changing it to adaptive instead of leaving it on or off by default. A computer program was developed to calculate whether or not overbooking would be profitable according to flight parameters.