Robust model and strategy of capacity control with overbooking for the airline hub-and-spoke network

• 1、School of Management and Economics, Beijing Institute of Technology, Beijing 100081
• 2、Beijing Research Center of Urban Systems Engineering, Beijing 100089
• 3、 Beijing Radiation Center,Beijing 100875

Abstract：Combining the single-leg R-MDP model proposed by Li Jin-lin et al in paper [1] with the resource decomposition approach of network capacity control, we build up the robust model of capacity control with overbooking for the airline hub-and-spoke network, and design nine types of robust joint strategies. We give a numerical example to show the robust revenue obtaining from the optimal robust joint strategy is higher than the corresponding nominal revenue obtaining from the optimal nominal joint strategy. Moreover, the less the remaining capacity and the larger the error level, the deeper the extent of the increasing revenue by using the robust joint strategy when demand estimation errors exist. At last, we analyze two kinds of robust bid price strategies, and compare the total revenue of the proposed nine robust joint strategies in the simulating example.

Keywords： Network Revenue Management Capacity Control Overbooking Robust Strategy