Nested booking limit definition
/What is a Nested Booking Limit?
A nested booking limit is a booking rule that allows full-priced reservations to intrude upon the capacity block that had been set aside for reservations at a lower price. Airlines use this booking rule to maximize the revenue that they can generate from each flight. An airline typically offers multiple fares for each flight, with the various fares setting different restrictions at different price points. The most expensive fares are flexible and refundable, while the lowest fares are not. In a nested booking limit arrangement, someone paying a higher fare can take seats that had been reserved for those paying a lower fare.
Example of a Nested Booking Limit
As an example of a nested booking limit, an airline sets up a booking limit on a forthcoming flight, where 75 seats are priced at $100 each and 25 seats are priced at $200, with no refunds allowed for the $100 tickets. A business group promptly buys the entire block of full-priced seats. At this point, the airline can increase its revenue by using a nested booking limit rule, which allows it to continue selling tickets at $200 each; as each of these tickets is sold, the allocation for the $100 tickets declines in size. This approach reduces the accessibility of low-priced tickets while expanding higher-priced ticket sales.
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When to Use a Nested Booking Limit
Using a nested booking limit makes the most sense in the following circumstances:
Demand is variable and price-sensitive across customer segments. You might have multiple fare classes or price tiers (e.g., economy saver, economy flex, business), and customers in higher fare classes are more likely to book later and pay more. Nested limits let you protect space for these more profitable bookings while still filling capacity early with lower-paying customers if higher-paying demand doesn’t materialize.
Overbooking isn't possible or is risky. In settings where overbooking is costly (e.g., hotels with limited rooms or premium services), nested booking gives a controlled way to prioritize higher-paying customers without overcommitting capacity.
There is predictable booking behavior across time. If historical data shows that higher-paying customers tend to book closer to the service date, you can use nested limits to avoid locking in too much low-fare demand early.