The “Adjustable-curtain” Strategy: Overbooking of Multiclass Service |
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Authors: | Staffan Ringbom Oz Shy |
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Affiliation: | (1) Department of Economics, Swedish School of Economics, P.O. Box 479, 00101 Helsinki, Finland (e-mail: staffan.ringbom@shh.fi), FI;(2) Department of Economics, University of Haifa, 31905 Haifa, Israel (e-mail: ozshy@econ.haifa.ac.il), IL |
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Abstract: | The “adjustable-curtain” strategy, now commonly practiced by many airline companies, refers to a strategy where the airline adjusts the size of the business-class section of the aircraft shortly before boarding takes place. This strategy enables the carrier to deny boarding of economy-class passengers in an event of a high show-up of business-class (high-paying) passengers by simply enlarging the business-class section at the expense of the economy-class section (and of course, the other way around, in a case of a low show-up of business passengers). This paper develops a simple method of computing a profit-maximizing reservation policy which determines the number of business- and economy-class bookings taking into account that the adjustable-curtain strategy will be utilized prior to boarding. Received July 27, 2001; revised version received October 5, 2001 |
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Keywords: | : adjustable-curtain strategy, overbooking, multiclass service, airline industry. |
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