Robust Model and Strategy of Capacity Control with Overbooking for Airline Hub-and-Spoke Network

Combining the single-leg R-MDP model appeared in reference 9 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 that the robust revenue obtained from the optimal robust joint strategy is higher than the corresponding nominal revenue obtained from the optimal nominal joint strategy. Moreover, with the existence of demand estimation errors, the less the remaining capacity or the larger the error level is, the deeper the extent of the increasing revenue by using the robust joint strategy. At last, we analyze two kinds of robust bid price strategies and compare the total revenue of the proposed nine robust joint strategies for the numerical example.