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17. Recommendations to the Client
We will deliver our findings using a series of charts. We will then recommend a series of next steps when implementing the overbooking policy.
Insights from the Model (00:04)
We consider three insights from our Excel model. First, an overbooking policy would have significantly boosted Zippy Airways’ profitability in the last three months, even at low conversion rates. Profitability follows an n-shaped curve. It increases as we take additional bookings, then eventually falls as the cost of bumping passengers overwhelms the additional revenue.
Our second insight is that higher voucher costs do impact profitability, but they only create a loss when the booking limit is very high. These losses can be avoided by setting the booking limit correctly. Finally, we see that seven of the 16 flights provide 95% of the additional profits. Only one flight makes a loss, and the remaining flights contribute little or no additional profits.
Our Recommendations (02:31)
Based on our model and our insights, we make three recommendations to Zippy Airways:
- Implement the overbooking policy initially on the most profitable routes
- Test various booking limits initially, instead of picking one and sticking to it
- Refine the model over time using real data for voucher costs, conversion rates etc.