Overbooking under dynamic and static policies

Overbooking, no‐shows and cancellations are important aspects of revenue management with published research going back several decades. Yet, despite availability of a variety of theoretical models including dynamic ones, in practice, airlines today are still applying relatively simplistic static solutions. We analyze underlying reasons for this situation and investigate potential benefits as complexity of the solution method increases. We present a comparison of modeling overbooking for no‐shows and cancellations using dynamic and static policies, and also analyze impact of the refund as well as denied boarding cost structures.