Abstract: Ticket overbooking is an effective way of profit gain for airlines. However, it is also risky. Thus, tradeoff should be made to maximize the profit and, at the same time, minimize the risk. By taking riskaversion into account in ticket overbooking problem, a mathematical model based on conditional valueatrisk (CVaR) is established. With this model, the conditions are obtained, under which an optimal overbooking strategy can be found. Results show that the optimal overbooking level depends on the distribution of arrival rate and the risk aversion level of the decisionmaker. Also, the optimal overbooking level is affected by the ticket price and unit overbooking loss.

Key words:  ticket overbooking in airline, risk aversion, conditional value-at-risk(CVaR)