Booking limit

The booking limit is a restriction on the maximum amount of inventory that can be sold at a certain price. For example, an airline sets aside a block of 50 seats on a specific flight that it will sell for $200 each. Once all 50 seats have been booked, the booking limit has been reached for that block of seats and no further tickets will be sold at the $200 price. Setting the booking limit is critical for maximizing revenue; setting it too low could mean that value-price customers are turned away, while setting it too high may result in full-fare customers being excluded. The booking limit can be set to automatically adjust downward when a large number of full-fare customers appear; this maximizes revenue at the cost of offering less inventory to value-price customers.

Related Courses

Revenue Management