282 The UMAP Journal 23.3 (2002) me mo r a n d u m February 11, 2002 To: Scott Dickson Chaiman, CEO and President of Vanguard Airlines From: Team 229 Airline Yield Management Research Subject: Policy Changes for Optimal Overbooking and Compensation After careful analysis of our company's current flight schedule, revenue per additional passenger, overbooking strategy, and several different compensation schemes for bumped passengers we have the following recommendations to maximize revenue on high demand flights 1)Since our historical records indicate that flights 101b, 251a, 325b, 451 a, 552 and 902a are the fights in highest demand, we recommend that our airline adopt a compensation package consisting of the following policies a) provision of overnight accommodations for those stranded during applicable b) Ticket vouchers for all sufficiently delayed passengers who will accep them in lieu of cash c)In addition, we are recommending against the use of meal compensation. This policy ensures the least cost to the airline in the case of an overbooked passenger while maintaining the highest possible level of customer satisfaction at that cost 2)While using this compensation package, we also advise you to overbook flights using the following numbers of allowable bookings for each high demand flight. a complete reference of allowable flight booking levels is Flight Allowable booking 101b 7a 140 42 142 552a 142282 The UMAP Journal 23.3 (2002)