OPTIMAL AND APPROXIMATE CONTROL POLICIES FOR AIRLINE BOOKING WITH SEQUENTIAL NONMONOTONIC FARE CLASSES

This paper addresses the question of when to refuse discount bookings from airline passengers to reserve seats for potential future passenge rs who are willing to pay a higher fare. When passengers arrive in seq uential fare classes, the optimal policy will be to accept reservation requests as long as the cumulative seats booked does not exceed a giv en booking limit. This paper relates the probability of filling the pl ane, under the optimal policy, with the ratios of the current to the h ighest remaining fare classes. In addition, it extends the solution fr om monotonically increasing fares to fares occurring in arbitrary orde r. Finally, it demonstrates how Monte Carlo integration is easy to use to get arbitrarily close approximations to the optimal policy.