Choice-Based Airline Schedule Design and Fleet Assignment: A Decomposition Approach
38 Pages Posted: 28 Jan 2020
Date Written: January 2, 2020
We study an integrated airline schedule design and fleet assignment model which constructs schedules by simultaneously selecting from a pool of optional flights and assigning aircraft types to these scheduled flights. This is a crucial tactical decision which greatly influences airline profit. In particular, we study a model that integrates within it a passenger choice behavior model and a corresponding choice-based network revenue management model. Passenger choice behavior is modeled using a multinomial logit choice model and the network revenue management problem is approximated using its compact sales-based linear programming formulation. To tackle the formidable computational challenge of solving this large-scale network design problem, we propose a decomposition approach based on partitioning the flight network into smaller subnetworks. Within this decomposition framework, we propose a novel fare split optimization model to allocate fares of products shared by flights in different subnetworks. This fare splitting idea is found to achieve significant profit improvement over commonly used heuristics such as proration by distance, which could be of independent interest for solving general network design problems. Computational experiments using realistically sized airline instances show that the proposed decomposition approach achieves substantial computational time speedup and/or profit improvement under the same computational budget.
Keywords: Airline Fleet Assignment, Airline Schedule Design, Passenger Choice Behavior, Decomposition
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