No Show Forecasts and Booking Limits - MBA Assignment

Running head: REVENUE MANAGEMENT
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MBA assignment
No show forecasts and booking limits
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Institutional Affiliation
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REVENUE MANAGEMENT
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No show forecasts and booking limits
Executive summary
Minimization of operating costs while maximizing the profits is the global goal for all
business entities. The airline industry is such a critical sector due to the level of high efficiency
required in running operations due to the complex nature and scope of activities and decisions
involved. Concisely, the cases of no shows could be a hazard for the profitability of the airlines
due to the daily losses incurred due to such incidences. The report, therefore, details the
forecasting techniques that can be used for predicting the number of no shows for the flight,
which could be added to the flight capacity as the number of extra booking the system, could
allow for catering for the canceled flights by the customers.
Additionally, obtaining the predicted values for the no shows would help the managers to
limit the number of denied boarding that often results in bad publicity and hefty losses incurred.
Therefore, the report presents the use of exponential smoothing and moving averages time series
models to help in forecasting the no shows for the TGA Flight 223 IAH EWR. The researcher
extracted the moving averages from the no shows data. From the obtained data, the researcher
applied exponential smoothing in an attempt to minimize the errors. Then drew a trend line for
the smoothened graph that was used for forecasting the future number of canceled trips, in
essence, the no shows values for the next period. The results indicated that the optimum value for
the no shows falls between four and five passengers. That number is added to the plane capacity
to give the booking limits.
Introduction
The airline industries are hugely faced with challenges about the customer services
problems, threats of punishment from the respective government authorities, and the negative

REVENUE MANAGEMENT
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publicity that could result from such practices according to O’Connell (2018). Interestingly, the
sector, just as any other business entity is objective towards customer satisfaction as well as
minimum operating costs with maximized profits. The executive and different managers from
various departments are often on the task to incline the operations into such aspects so that the
firm can collectively achieve profitability and returns. Conforming activities to customer
satisfaction and maximum productivity is, therefore, a challenge that the airline industry is ever
devising techniques to curb the revenue wastage that easily come along with substantial
uncertainties of their occurrences (Papatheodorou and Efthymiou, 2018).
For instance, the Texas Global Airline intends to address the unpredictable losses that
come along with no shows of passengers who had made reservations for the trip. The high rate of
no shows among the customers of TGA is reported to result in losses for the company, as flights
have to depart with an alarming number of seats leading to deeming profits, in essence, massive
losses (Bridi and Lima, 2018). To curb the challenge, the company sets the booking limit slightly
above the flight capacity so that the no shows incidences are catered for by excess passenger
bookings made. However, that has precipitated a scenario of difficult decisions to be made by the
managers in cases where all the passengers including those allowed for excess booking show up.
During such incidences, the operations team denies board for some passengers to fly on the
departing flight due to the enplaned capacity.
Forecasts
Having evaluated the case problem, the TGA Company intends to use time series
forecasts that would predict the no shows cases using the data for the previous year for the
following year. The analysis should them translate the no shows into booking limits that would
minimize the denied boarding of extra passengers that is accompanied by heavy compensation