Enhancing Airline Handling of Large Scale Flight Cancelation Events through Pre-emptive Rebooking

Although, on average, only 2.1% of airline flights are cancelled each year, some of these flight cancellations occur in batches due to events that impact airline network operations such as snow storms, equipment outages, and labor issues. Batch flight cancellations impact a large number of passengers at the same time in the same location and have a negative effect on airline revenue (due to refund obligations), corporate profits (due to unbudgeted costs of employee travel), and overall traveler experience. Due to technological limitations and air traffic control procedures airlines are obliged to deal with these cancellation events in a reactive manner. The flight cancellation is announced at the last minute and passengers are rebooked after the scheduled flight departure time. Advances in meteorological forecasting, air traffic control procedures for irregular operations (e.g. Collaborative Decision Making), and the ubiquity of inexpensive and reliable broadband communication services for communication between airlines and passengers, have changed the landscape. It is now possible for airlines to migrate to a pro-active approach whereby the cancellation event would be announced in advance and passengers would have the option to rebook before the large scale cancellation event (i.e. pre-emptive rebooking). If an airline were to adopt this pre-emptive approach: (1) could the available seat capacity accommodate the passengers, and (2) would this approach be economically beneficial to the airlines and the passengers? This paper describes a method for Monte Carlo simulation of passenger re-booking using historic flight schedules, load factors, and passenger itineraries to assess the feasibility and economic benefits. Case-studies of 13 large flight cancellation events for a major U.S. network carrier were analyzed. The results indicate that pre-emptive rebooking is feasible. More than 70% of the passengers choosing to rebook pre-emptively can be accommodated. Further, preemptive rebooking is economically beneficial, yielding savings for airlines, and corporate employers of travelers. The implications of these results for airlines, corporations, and travelers are discussed.