Quantifying the Benefits of Pre-emptive Rebooking: a Case Study for a U.s. Hub

Although, on average, only 2.1% of airline flights are cancelled each year, some of these cancellations occur in batches due to events that impact network operations such as snow storms, equipment outages, and labor issues. Batch 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. Since some of these batch flight cancellations can be now be accurately predicted in advance. Along with changes in the National Airspace System (NAS) that allow airlines to plan cancellations in advance (i.e. Collaborative Decision Making programs), and the ubiquity of inexpensive and reliable broadband communication services for communication between airlines and passengers, it is now possible for airlines to migrate from a concept-of-operations of rebooking passengers after the cancellation event, to re-booking passengers before the large scale cancellation event (i.e. pre-emptive rebooking). This paper describes a method for Monte Carlo analysis of the feasibility and benefits of pre-emptive rebooking of passengers. A case-study of 13 one-day cancellation events for a major U.S. network carrier operating a mid-west hub showed that: (i) pre-emptive rebooking is feasible accommodating more than 70% of the passengers seeking to rebook pre-emptively, (ii) rebooking passengers on the same day before the departure time of the cancelled flight, accommodates a majority of the passengers (i.e. previous day rebooking is not required), (iii) airlines can recoup up to an average of $297K per one-day event in airfare refund obligations, and (iv) corporations sponsoring business travel can save collectively up to an average of $49K on unplanned travel expenses. The implications of these results for airlines, corporations and travelers are discussed.