Competitive integrated airline schedule design and fleet assignment

Yifan Xu, Nicole Adler, Sebastian Wandelt, Xiaoqian Sun*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

Airline profits are significantly influenced by competitive timetables that match passenger demand to fleet resources. In this research, we develop an integrated, mixed-integer optimization model to derive a comprehensive flight schedule, fleet assignment, and average airfares jointly. Passenger choice behavior is incorporated through a prospect theory-adjusted, nested, multinomial logit model which estimates market share. The competitive fleet assignment and schedule design (CFSD) formulation is embedded in a differentiated Bertrand game, such that each transport operator optimizes their best response function connected through the market share model. To solve the integrated optimization problem efficiently, a hybrid algorithm is developed that combines stabilized column generation with a large neighborhood search algorithm. The game-theoretic framework is applied to a case study in China involving legacy airlines, a low-cost carrier, and a high-speed rail (HSR) operator. The equilibrium outcomes suggest that the low-cost carrier is likely to stimulate demand and improve the level of service through secondary airports. The further development of high-speed rail service is expected to intensify competition among airlines and reduce the overall fare level. The low-cost carriers and HSR are able to significantly increase overall consumer surplus, providing insights into the potential for low-cost service in the Chinese aviation markets and the entrance of the public service obligation program at minimum cost.

Original languageAmerican English
Pages (from-to)32-50
Number of pages19
JournalEuropean Journal of Operational Research
Volume314
Issue number1
DOIs
StatePublished - 1 Apr 2024

Bibliographical note

Publisher Copyright:
© 2023 Elsevier B.V.

Keywords

  • Airline scheduling
  • Column generation
  • Non-cooperative game
  • Prospect theory

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