Your flight has 200 seats. You sell two fares: a Saver fare at $262 and a Business fare at $476. Saver demand is high enough to fill any seats not protected for business. How many seats should you protect?

Seats to protect for business

15 seats

Expected business demand (mean)

25 passengers

Your expected revenue

—

with 15 seats protected

Optimal expected revenue

—

at — seats protected

Marginal value of last seat

—

vs $262 saver fare

The chart shows the expected marginal value of protecting each additional seat: P(business demand ≥ n) × $476. The dashed line marks the saver fare ($262) — below it, you're better off selling the seat at the saver fare.