An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances

Xiaojia Wang; Richard Y.K. Fung

doi:10.1016/j.tre.2014.06.014

Author(s)

Xiaojia Wang
Richard Y.K. Fung

Detail(s)

Original language	English
Pages (from-to)	146-162
Journal / Publication	Transportation Research Part E: Logistics and Transportation Review
Volume	70
Issue number	1
Publication status	Published - Oct 2014

Link(s)

DOI	DOI https://doi.org/10.1016/j.tre.2014.06.014 Final Published version
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Link to Scopus	https://www.scopus.com/record/display.uri?eid=2-s2.0-84905377257&origin=recordpage
Permanent Link	https://scholars.cityu.edu.hk/en/publications/publication(4ea3240f-e4da-45f0-b691-9cf4bfa2eb35).html

Abstract

In the context of parallel alliances, this paper proposes and describes an option-based mechanism that allows an airline to transfer bumped passengers to its alliance partner's flight. The objective of this mechanism is to reduce the overbooking risk borne by the allied airlines. An analytical model is built to calculate the net benefit that can be obtained by the airlines. The simulation results confirm that the proposed mechanism can generate monetary and non-monetary benefits for allied carriers under many practical conditions. © 2014 Elsevier Ltd.

Research Area(s)

Airline alliances, Mechanism design, Options application, Overbooking risk, Simulation

Citation Format(s)

[ RIS ] [ BibTeX ]

An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances. / Wang, Xiaojia; Fung, Richard Y.K.
In: Transportation Research Part E: Logistics and Transportation Review, Vol. 70, No. 1, 10.2014, p. 146-162.

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

Wang, X & Fung, RYK 2014, 'An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances', Transportation Research Part E: Logistics and Transportation Review, vol. 70, no. 1, pp. 146-162. https://doi.org/10.1016/j.tre.2014.06.014

Wang, X., & Fung, R. Y. K. (2014). An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances. Transportation Research Part E: Logistics and Transportation Review, 70(1), 146-162. https://doi.org/10.1016/j.tre.2014.06.014

Wang X, Fung RYK. An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances. Transportation Research Part E: Logistics and Transportation Review. 2014 Oct;70(1):146-162. doi: 10.1016/j.tre.2014.06.014

Wang, Xiaojia ; Fung, Richard Y.K. / An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances. In: Transportation Research Part E: Logistics and Transportation Review. 2014 ; Vol. 70, No. 1. pp. 146-162.