Modeling Airline Frequency Competition for Airport Congestion Mitigation

Demand often exceeds capacity at congested airports. Airline frequency competition is partially responsible for the growing demand for airport resources. We propose a game-theoretic model for airline frequency competition under slot constraints. The model is solved to obtain a Nash equilibrium using a successive optimizations approach, wherein individual optimizations are performed using a dynamic programming-based technique. The model predictions are validated against actual frequency data, with the results indicating a close fit to reality. We use the model to evaluate different strategic slot allocation schemes from the perspectives of the airlines and the passengers. The most significant result of this research shows that a small reduction in the total number of allocated slots translates into a substantial reduction in flight and passenger delays and also a considerable improvement in airlines' profits

Improving joint revenues through partner sharing of flight leg opportunity costs

Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2012.Cataloged from PDF version of thesis.Includes bibliographical references (p. 125-128).Airlines participating in alliances offer code share itineraries (with flight segments operated by different partners) to expand the range of origin-destination combinations offered to passengers, thus increasing market share at little cost. The presence of code share flights presents a problem for airline revenue management (RM) systems, which aim to maximize revenues in an airline's network by determining which booking requests are accepted. Because partners do not jointly optimize revenues on code share flights, alliance revenue gains from implementing advanced RM methods may be lower than an individual airline's gains. This thesis examines seat availability control methods that alliance partners can adopt to improve the total revenues of the alliance without formally merging. Partners share information about the opportunity costs to their network, called "bid prices", of selling a seat on their own flight leg, a mechanism termed bid price sharing (BPS). Results show that BPS methods often improve revenues and work best for networks with certain characteristics and partners with similar RM systems that exchange recently calculated bid prices as often as possible. Gains are typically only achieved if both alliance partners participate in the code share availability decision (called dual control) rather than one partner only, but implementation of dual control is more difficult for airlines in practice. In the best case scenario, gains of up to .40% where achieved, which can translate into $120 million per year for the largest airlines. In our simulations, BPS with dual control and frequent bid price calculation and exchange was the only method that produced consistently positive revenue gains in all the scenarios tested. Therefore, alliance airlines must consider the trade off between revenue gains and implementation difficulties of more frequent bid price exchange or dual control.by Alyona Michel.S.M.in Transportatio

Revenue management of airport car parks in continuous time

We study the revenue management (RM) problem encountered in airport car parks, with the primary objective to maximize revenues under a continuous-time framework. The implementation of pre-booking systems for airport car parks has spread rapidly around the world and pre-booking is now available in most major airports. Currently, most RM practises in car parks are simple adjustments of those developed for hotels, exploiting the similarities between the two industries. However, airport car parks have a distinct setting where the price per day of a parking space is heavily discounted by the length of stay (LoS) of the booking. This is because the customer decision tends to be made after the length of the trip is already set, and it becomes a choice between parking or alternative modes of transport. Consequently, the LoS becomes a critical variable for revenue optimization. Since customers are able to book the parking by the minute, the resulting state space is very large, making a conventional network solution intractable . Instead, decomposed single-resource problems need to be considered. Here we develop a bid-price control strategy to manage the bookings and propose novel approaches to define such bid prices depending on the LoS, which could be utilized in real-time RM algorithms. Managing stochastic car park bookings by LoS in the decomposed single-resource approximation allowed us to achieve within 5% of the expected revenues for a multi-resource approximation, with a fraction of the computational effort. When expected demand exceeds the available parking capacity, the method increases the revenues by up to 45% relative to the first come, first served acceptance policy

Revenue Management for Strategic Alliances with Applications to the Airline Industry

Die Dissertation erscheint parallel im<a href="http://www.dr.hut-verlag.de/9783843902595.html"> Verlag Dr. Hut, München An airline has to decide whether to accept an incoming customer request for a seat in an airplane or to reject it in hope that another customer will request the seat later at a higher price. Within strategic alliances of airline partners this decision problem grows more complex. The presented work develops an option-based capacity control method, which dynamically decides on the acceptance or the rejection of customer requests to maximize the combined revenue of the alliance partners

Operational Research: Methods and Applications

Throughout its history, Operational Research has evolved to include a variety of methods, models and algorithms that have been applied to a diverse and wide range of contexts. This encyclopedic article consists of two main sections: methods and applications. The first aims to summarise the up-to-date knowledge and provide an overview of the state-of-the-art methods and key developments in the various subdomains of the field. The second offers a wide-ranging list of areas where Operational Research has been applied. The article is meant to be read in a nonlinear fashion. It should be used as a point of reference or first-port-of-call for a diverse pool of readers: academics, researchers, students, and practitioners. The entries within the methods and applications sections are presented in alphabetical order. The authors dedicate this paper to the 2023 Turkey/Syria earthquake victims. We sincerely hope that advances in OR will play a role towards minimising the pain and suffering caused by this and future catastrophes

Operational Research: Methods and Applications

Throughout its history, Operational Research has evolved to include a variety of methods, models and algorithms that have been applied to a diverse and wide range of contexts. This encyclopedic article consists of two main sections: methods and applications. The first aims to summarise the up-to-date knowledge and provide an overview of the state-of-the-art methods and key developments in the various subdomains of the field. The second offers a wide-ranging list of areas where Operational Research has been applied. The article is meant to be read in a nonlinear fashion. It should be used as a point of reference or first-port-of-call for a diverse pool of readers: academics, researchers, students, and practitioners. The entries within the methods and applications sections are presented in alphabetical order

Dynamic Simultaneous Fare Proration for Large-Scale Network Revenue Management

Network revenue management is concerned with managing demand for products that require inventory from one or several resources by controlling product availability and/or prices in order to maximize expected revenues subject to the available resource capacities. One can tackle this problem by decomposing it into resource-level subproblems that can be solved efficiently, e.g. by dynamic programming (DP). We propose a new dynamic fare proration method specifically having large-scale applications in mind. It decomposes the network problem by fare proration and solves the resource-level dynamic programs simultaneously using simple, endogenously obtained dynamic marginal capacity value es- timates to update fare prorations over time. An extensive numerical simulation study demonstrates that the method results in tightened upper bounds on the optimal expected revenue, and that the obtained policies are very effective with regard to achieved revenues and required runtime

Analysing the Network & Schedule Performance of Airlines and Developing a Passenger-Centric Commercial Methodology for Air Services

In the aviation industry and academic literature, there are a number of methods to compute and benchmark the perceived quality of the airline schedule. However, these are open to criticism in the sense that they solely use the airline’s schedules as the input for the quality computation rather than the consumer’s perspective. Injecting dynamic consumer preference metrics on top of the existing network evaluation methods is the aim of this research. Therefore, the research brings a new and innovative passenger-oriented perspective on airline network and schedule design, an outlook regarding the “quality” of supply rather than the sole “quantity” of the supply. The model also helps to compute schedule-service quality indexes by understanding consumers’ priorities and preferences through a survey. Using the schedule data of main legacy and low cost carriers in the Middle East, Europe and Africa the model produces a “realistic market share” estimation for each airline serving particular routes. The model’s outputs provide guidelines to effectively shape the airline planners’ investment decisions in the sense that, the airline executives will be enabled to numerically assess the estimated realistic market share change of a potential investment and to benchmark the performance of their products against competitors. Moreover, the research contributes to the academic literature by conceptualising the comparative and competitive advantages of airline schedules and network designs from a consumer-centric perspective

Operational research:methods and applications

Throughout its history, Operational Research has evolved to include a variety of methods, models and algorithms that have been applied to a diverse and wide range of contexts. This encyclopedic article consists of two main sections: methods and applications. The first aims to summarise the up-to-date knowledge and provide an overview of the state-of-the-art methods and key developments in the various subdomains of the field. The second offers a wide-ranging list of areas where Operational Research has been applied. The article is meant to be read in a nonlinear fashion. It should be used as a point of reference or first-port-of-call for a diverse pool of readers: academics, researchers, students, and practitioners. The entries within the methods and applications sections are presented in alphabetical order