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.