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From Bookings to Demand The Process of Unconstraining. Stefan Pölt, Lufthansa Presentation to the AGIFORS Reservations and Yield Management Study Group New York, 22.-24. March 2000. Agenda. Unconstraining What is it ? Why is it done ? How is it done ? What are the problems ?
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From Bookings to DemandThe Process of Unconstraining • Stefan Pölt, Lufthansa • Presentation to the AGIFORS • Reservations and Yield Management Study Group • New York, 22.-24. March 2000
Agenda • Unconstraining • What is it ? • Why is it done ? • How is it done ? • What are the problems ? • Are there solutions ?
„Unconstraining“ „Detruncation“ „Spill Analysis“ „Censored Data Analysis“ What Is It ? • The process of estimating how much demand could have been accepted without any capacity or booking control limit
- Now You Don’t Now You See It
What Is Demand ? • It is a ‘philosophical’ question how demand on a specific flight in a specific booking class should be defined • The choice of passengers depends on the availability of different alternatives • Not every booking represents ‘first choice’ demand • Concentrating on first choice demand makes the difference between demand and observed bookings even worse
Forecasting Optimization Unconstraining Booking Control Observed Bookings Passenger Choice Accept / Reject Why Is It Done ? • To fill the gap between what is needed and what can be observed Demand Bookings
Why Should We Look At It ? • In PODS we have seen that good unconstraining is as important as good forecasting and as the step from leg to O&D • That does not make the latter two less important !
Historical Bookings Historical Demand Historical Availabilities Unconstraining Parameter How Is It Done ? • Look for similar historical flights that have not been restricted • Take average booking change of these flights and apply it to restricted ones
Unconstraining Forecasting Historical Bookings Historical Demand Forecasting Parameter Forecast Demand Historical Availabilities Unconstraining Parameter Actual Bookings Unconstraining & Forecasting • Is the separation of unconstraining and forecasting necessary ? • Unconstraining is a special case of forecasting • Unconstraining parameters could be used to forecast future flights
How Is It Done ? • Additive • Multiplicative • Expectation Maximization • Others
Possible Problems • Not enough unrestricted historical events • Sponsoring with similar markets ? • Outlier (e.g. group bookings / cancellations) • Outlier detection before unconstraining • No quality measurement possible • Simulations
Systematic Errors • Unconstraining is too low because: • Sampling bias: historical unrestricted off-peak flights are used to unconstrain restricted peak flights • Even if a class is not restricted at the fixed snapshots it might be restricted in between two snapshots • Even if a class is not restricted some connections might be restricted (holds for leg-based unconstraining only)
Systematic Errors • Unconstraining is too high because: • Double counting: if only one of two alternatives is available there might appear a booking on the open one and an additional (unconstrained) booking at the closed one • If the total demand flickers around the booking limit - e.g small numbers in O&D unconstraining (mainly affects unconstraining from snapshot to snapshot)
The higher the demand the greater the sampling bias Sampling Bias • Higher probability of being constrained in case of • high demand • low booking limit wish
Results • EM lowers the systematic error but does not solve the sampling bias problem.