Choice-Based Airline Schedule Design and Fleet Assignment: A Decomposition Approach

38 Pages Posted: 28 Jan 2020

See all articles by Chiwei Yan

Chiwei Yan

Uber Technologies, Inc.

Cynthia Barnhart

Massachusetts Institute of Technology (MIT) - Operations Research Center

Vikrant Vaze

Thayer School of Engineering

Date Written: January 2, 2020

Abstract

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

Suggested Citation

Yan, Chiwei and Barnhart, Cynthia and Vaze, Vikrant, Choice-Based Airline Schedule Design and Fleet Assignment: A Decomposition Approach (January 2, 2020). Available at SSRN: https://ssrn.com/abstract=3513164 or http://dx.doi.org/10.2139/ssrn.3513164

Chiwei Yan (Contact Author)

Uber Technologies, Inc. ( email )

San Francisco, CA 94158
United States

HOME PAGE: http://web.mit.edu/chiwei/www

Cynthia Barnhart

Massachusetts Institute of Technology (MIT) - Operations Research Center ( email )

77 Massachusetts Avenue
Bldg. E 40-149
Cambridge, MA 02139
United States

Vikrant Vaze

Thayer School of Engineering ( email )

14 Engineering Drive
Hanover, NH New Hampshire 03755
United States
6036469147 (Phone)

HOME PAGE: http://engineering.dartmouth.edu/people/faculty/vikrant-vaze/

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