The Application of Real Options Analysis in the Risk Decision of Overbooking in Airlines
Overbooking is an important tool for revenue management. This paper, which is based on the perspective of producers of perishable goods - the airline, proposes to introduce a new tool in reducing and avoiding these two kinds of risks while making decision on the volume of overbooking. This paper also probes into the problems of overbooking and the feasibility of the introduction of options, also builds a model of real options in overbooking and utilize a simple example to analysis the feasibility of real option in aviation – overbooking.
Keywordsmanagement overbook real option application
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