A market spill–recapture unconstraining model for estimating airline true demand

The true demand of airline tickets is defined as the number of passengers that would book a particular flight if there was no capacity constraint. Estimating the true demand plays a crucial role in airline revenue management and pricing. In this paper, we developed a true demand unconstraining model that incorporated passenger choice models, allowing us to simultaneously estimate true demand for all booking classes in a market. Simulated booking data were generated to inform the true demand that is unavailable in the real-world setting. Numerical experiments showed that our model could outperform a benchmarking model by up to 10%.