An integrated airline scheduling, fleeting, and pricing model for a monopolized market

Journal Article (2014)
Author(s)

B. Atasoy (École Polytechnique Fédérale de Lausanne)

Matteo Salani (University of Lugano)

M. Bierlaire (École Polytechnique Fédérale de Lausanne)

Affiliation
External organisation
DOI related publication
https://doi.org/10.1111/mice.12032
More Info
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Publication Year
2014
Language
English
Affiliation
External organisation
Issue number
2
Volume number
29
Pages (from-to)
76-90

Abstract

In airline schedule planning models, the demand and price information are usually taken as inputs to the model. Therefore, schedule and capacity decisions are taken separately from pricing decisions. In this article, we present an integrated scheduling, fleeting, and pricing model for a single airline where these decisions are taken simultaneously. This integration enables to explicitly model supply and demand interactions and make superior decisions. The model refers to a monopolized market. However, competing airlines are included in the model as a reference for the pricing decisions. The pricing decision is formulated through an itinerary choice model which determines the demand of the alternative itineraries in the same market according to their price, travel time, number of stops, and the departure time of the day. The demand model is estimated based on real data and is developed separately for economy and business classes. The seat allocation for these classes is optimized according to the behavior of the demand. The choice model is also used to appropriately model the spill and recapture effects. The resulting model is evaluated with different illustrations and the added value of the integrated approach is analyzed compared to a sequential approach. Results over a set of representative instances show that the integrated model is able to make superior decisions by jointly adjusting capacity and pricing.

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