Exploring passengers’ choices in the event of denied boarding compensation

Abstract

Overbooking practices are widely adopted to mitigate the impact of airline cancellations and no-shows. However, when denied boarding occurs, appropriately compensating passengers is crucial for maintaining satisfaction and securing yield. This study investigates the attributes influencing passengers’ preferences for compensations when they voluntarily accept denied boarding. A holistic framework encompassing compensations at different stages is proposed to conduct a choice experiment. Face-to-face questionnaires are collected at the airport and discrete choice models are applied to verify the framework. The results confirm behavioral heterogeneity and identify three segments with varying preferences for compensation attributes. A simulation further reveals the incremental effects of probabilities given different compensations. These findings enable service operators to implement segment-oriented compensation plans that encourage the acceptance of denied boarding while maintaining customer satisfaction.