IDEAS home Printed from https://ideas.repec.org/a/pal/jorapm/v20y2021i5d10.1057_s41272-020-00277-9.html
   My bibliography  Save this article

A mixed-integer nonlinear optimization model for integrated flight scheduling, fleet assignment, and ticket pricing in competitive market

Author

Listed:
  • Masood Kiarashrad

    (Kharazmi University)

  • Seyed Hamid Reza Pasandideh

    (Kharazmi University)

  • Mohammad Mohammadi

    (Kharazmi University)

Abstract

In the airline industry, ticket pricing is one of the most complex problems that researchers and practitioners are extensively involved on it. In fleet assignment and airline scheduling problems, ticket price is usually taken as an input. This paper presents an integrated model of fleet assignment, airline scheduling, and ticket pricing in a network of competitive market. Four essential factors are considered as important factors that can affect ticket pricing. The model is formulated as a mixed-integer nonlinear programming, and as it is NP-Hard, a tabu search metaheuristic method is proposed to solve the model. Results show that airport dominance, route dominance, time dominance, and flag carrier dominance have influence on average ticket price in the market and model finds the best time and routes for flights to increase pricing power and eventually airline profit.

Suggested Citation

  • Masood Kiarashrad & Seyed Hamid Reza Pasandideh & Mohammad Mohammadi, 2021. "A mixed-integer nonlinear optimization model for integrated flight scheduling, fleet assignment, and ticket pricing in competitive market," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(5), pages 596-607, October.
    • Handle: RePEc:pal:jorapm:v:20:y:2021:i:5:d:10.1057_s41272-020-00277-9
    DOI: 10.1057/s41272-020-00277-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41272-020-00277-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41272-020-00277-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brey, Raúl & Walker, Joan L., 2011. "Latent temporal preferences: An application to airline travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(9), pages 880-895, November.
    2. Jeffrey I. McGill & Garrett J. van Ryzin, 1999. "Revenue Management: Research Overview and Prospects," Transportation Science, INFORMS, vol. 33(2), pages 233-256, May.
    3. Brian Rexing & Cynthia Barnhart & Tim Kniker & Ahmad Jarrah & Nirup Krishnamurthy, 2000. "Airline Fleet Assignment with Time Windows," Transportation Science, INFORMS, vol. 34(1), pages 1-20, February.
    4. Yan, Shangyao & Tang, Ching-Hui & Fu, Tseng-Chih, 2008. "An airline scheduling model and solution algorithms under stochastic demands," European Journal of Operational Research, Elsevier, vol. 190(1), pages 22-39, October.
    5. Enrico Bachis & Claudio A. Piga, 2006. "Hub Premium, Airport Dominance and Market Power in the European Airline Industry," Rivista di Politica Economica, SIPI Spa, vol. 96(5), pages 11-54, September.
    6. Zeghal, F.M. & Minoux, M., 2006. "Modeling and solving a Crew Assignment Problem in air transportation," European Journal of Operational Research, Elsevier, vol. 175(1), pages 187-209, November.
    7. Guy Desaulniers & Jacques Desrosiers & Yvan Dumas & Marius M. Solomon & François Soumis, 1997. "Daily Aircraft Routing and Scheduling," Management Science, INFORMS, vol. 43(6), pages 841-855, June.
    8. E. Andrew Boyd & Ioana C. Bilegan, 2003. "Revenue Management and E-Commerce," Management Science, INFORMS, vol. 49(10), pages 1363-1386, October.
    9. Coldren, Gregory M. & Koppelman, Frank S. & Kasturirangan, Krishnan & Mukherjee, Amit, 2003. "Modeling aggregate air-travel itinerary shares: logit model development at a major US airline," Journal of Air Transport Management, Elsevier, vol. 9(6), pages 361-369.
    10. Gabriel Bitran & René Caldentey, 2003. "An Overview of Pricing Models for Revenue Management," Manufacturing & Service Operations Management, INFORMS, vol. 5(3), pages 203-229, August.
    11. Pita, João P. & Adler, Nicole & Antunes, António P., 2014. "Socially-oriented flight scheduling and fleet assignment model with an application to Norway," Transportation Research Part B: Methodological, Elsevier, vol. 61(C), pages 17-32.
    12. Hanif Sherali & Ki-Hwan Bae & Mohamed Haouari, 2013. "A benders decomposition approach for an integrated airline schedule design and fleet assignment problem with flight retiming, schedule balance, and demand recapture," Annals of Operations Research, Springer, vol. 210(1), pages 213-244, November.
    13. Amos Levin, 1971. "Scheduling and Fleet Routing Models for Transportation Systems," Transportation Science, INFORMS, vol. 5(3), pages 232-255, August.
    14. Sherali, Hanif D. & Bish, Ebru K. & Zhu, Xiaomei, 2006. "Airline fleet assignment concepts, models, and algorithms," European Journal of Operational Research, Elsevier, vol. 172(1), pages 1-30, July.
    15. Hanif D. Sherali & Ki-Hwan Bae & Mohamed Haouari, 2010. "Integrated Airline Schedule Design and Fleet Assignment: Polyhedral Analysis and Benders' Decomposition Approach," INFORMS Journal on Computing, INFORMS, vol. 22(4), pages 500-513, November.
    16. Manoj Lohatepanont & Cynthia Barnhart, 2004. "Airline Schedule Planning: Integrated Models and Algorithms for Schedule Design and Fleet Assignment," Transportation Science, INFORMS, vol. 38(1), pages 19-32, February.
    17. Pita, João Pedro & Antunes, António Pais & Barnhart, Cynthia & de Menezes, António Gomes, 2013. "Setting public service obligations in low-demand air transportation networks: Application to the Azores," Transportation Research Part A: Policy and Practice, Elsevier, vol. 54(C), pages 35-48.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abdelghany, Ahmed & Abdelghany, Khaled & Azadian, Farshid, 2023. "The airline seat capacity allocation problem: An expected marginal profit approach," Journal of Air Transport Management, Elsevier, vol. 112(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antunes, António P. & Santos, Miguel G. & Pita, João P. & Menezes, António G., 2018. "Study on the evolution of the air transport network of the Azores," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 837-851.
    2. Birolini, Sebastian & Antunes, António Pais & Cattaneo, Mattia & Malighetti, Paolo & Paleari, Stefano, 2021. "Integrated flight scheduling and fleet assignment with improved supply-demand interactions," Transportation Research Part B: Methodological, Elsevier, vol. 149(C), pages 162-180.
    3. Pita, João P. & Adler, Nicole & Antunes, António P., 2014. "Socially-oriented flight scheduling and fleet assignment model with an application to Norway," Transportation Research Part B: Methodological, Elsevier, vol. 61(C), pages 17-32.
    4. João P. Pita & Cynthia Barnhart & António P. Antunes, 2013. "Integrated Flight Scheduling and Fleet Assignment Under Airport Congestion," Transportation Science, INFORMS, vol. 47(4), pages 477-492, November.
    5. Okan Örsan Özener & Melda Örmeci Matoğlu & Güneş Erdoğan & Mohamed Haouari & Hasan Sözer, 2017. "Solving a large-scale integrated fleet assignment and crew pairing problem," Annals of Operations Research, Springer, vol. 253(1), pages 477-500, June.
    6. Abdelghany, Ahmed & Abdelghany, Khaled & Azadian, Farshid, 2023. "The airline seat capacity allocation problem: An expected marginal profit approach," Journal of Air Transport Management, Elsevier, vol. 112(C).
    7. Keji Wei & Vikrant Vaze, 2020. "Airline Timetable Development and Fleet Assignment Incorporating Passenger Choice," Transportation Science, INFORMS, vol. 54(1), pages 139-163, January.
    8. F M Zeghal & M Haouari & H D Sherali & N Aissaoui, 2011. "Flexible aircraft fleeting and routing at TunisAir," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(2), pages 368-380, February.
    9. Oliver Faust & Jochen Gönsch & Robert Klein, 2017. "Demand-Oriented Integrated Scheduling for Point-to-Point Airlines," Transportation Science, INFORMS, vol. 51(1), pages 196-213, February.
    10. Hanif D. Sherali & Ki-Hwan Bae & Mohamed Haouari, 2013. "An Integrated Approach for Airline Flight Selection and Timing, Fleet Assignment, and Aircraft Routing," Transportation Science, INFORMS, vol. 47(4), pages 455-476, November.
    11. Liang, Zhe & Feng, Yuan & Zhang, Xiaoning & Wu, Tao & Chaovalitwongse, Wanpracha Art, 2015. "Robust weekly aircraft maintenance routing problem and the extension to the tail assignment problem," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 238-259.
    12. Zhe Liang & Wanpracha Art Chaovalitwongse, 2013. "A Network-Based Model for the Integrated Weekly Aircraft Maintenance Routing and Fleet Assignment Problem," Transportation Science, INFORMS, vol. 47(4), pages 493-507, November.
    13. Sherali, Hanif D. & Bish, Ebru K. & Zhu, Xiaomei, 2006. "Airline fleet assignment concepts, models, and algorithms," European Journal of Operational Research, Elsevier, vol. 172(1), pages 1-30, July.
    14. Xu, Yifan & Wandelt, Sebastian & Sun, Xiaoqian, 2021. "Airline integrated robust scheduling with a variable neighborhood search based heuristic," Transportation Research Part B: Methodological, Elsevier, vol. 149(C), pages 181-203.
    15. Leandro, Francisco & Andrade, Antonio R. & Kalakou, Sofia, 2021. "Designing aviation networks under Public Service Obligations (PSO): A case study in Greece," Journal of Air Transport Management, Elsevier, vol. 93(C).
    16. Hanif Sherali & Ki-Hwan Bae & Mohamed Haouari, 2013. "A benders decomposition approach for an integrated airline schedule design and fleet assignment problem with flight retiming, schedule balance, and demand recapture," Annals of Operations Research, Springer, vol. 210(1), pages 213-244, November.
    17. Haouari, Mohamed & Aissaoui, Najla & Mansour, Farah Zeghal, 2009. "Network flow-based approaches for integrated aircraft fleeting and routing," European Journal of Operational Research, Elsevier, vol. 193(2), pages 591-599, March.
    18. Shan Lan & John-Paul Clarke & Cynthia Barnhart, 2006. "Planning for Robust Airline Operations: Optimizing Aircraft Routings and Flight Departure Times to Minimize Passenger Disruptions," Transportation Science, INFORMS, vol. 40(1), pages 15-28, February.
    19. Belanger, Nicolas & Desaulniers, Guy & Soumis, Francois & Desrosiers, Jacques, 2006. "Periodic airline fleet assignment with time windows, spacing constraints, and time dependent revenues," European Journal of Operational Research, Elsevier, vol. 175(3), pages 1754-1766, December.
    20. Irene Ng & Nick K.T. Yip, 2009. "Mechanism design in an integrated approach towards revenue management: the case of Empress Cruise Lines," The Service Industries Journal, Taylor & Francis Journals, vol. 31(3), pages 469-482, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorapm:v:20:y:2021:i:5:d:10.1057_s41272-020-00277-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.