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Article: Optimal route allocation in a liberalizing airline market

TitleOptimal route allocation in a liberalizing airline market
Authors
Keywords0-1 Integer Programming
Air Transport Liberalization
Airline Network
Implicit Enumeration
Investment
Route Allocation
Issue Date2010
PublisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/trb
Citation
Transportation Research Part B: Methodological, 2010, v. 44 n. 7, p. 886-902 How to Cite?
AbstractAirlines often encounter two major problems in expanding their international networks: (1) restrictive Air Services Agreements (ASAs) governing airlines' commercial rights, and (2) slot / capacity constraints in foreign hub airports. Government interventions are needed to solve these problems, yet few quantitative models are available to guide the design of related public policies. This paper proposes a new model for optimizing the allocation of additional routes in a liberalizing airline market, in which airport capacity constraints are explicitly considered. The proposed model captures the interactions among three types of agents: (1) a regulator who aims to maximize social welfare by optimizing the allocation of additional routes to competing carriers; (2) airlines competing with flight frequency and airfare; and (3) passengers who minimize their own travel disutility (or equivalently maximize utility) given airlines' services and prices. In the proposed model, the passenger demand elasticity is also explicitly considered. The route allocation model is formulated as a 0-1 integer programming problem, and is solved by a heuristic implicit enumeration approach. The Korean - mainland China - Hong Kong airline market serves as model illustration. The effects of airport slot constraints are examined, and the revealed value (marginal welfare gain) of airport capacity expansion is also calculated, which can potentially serve as a benchmark indicator for the planning of airport investments. © 2009 Elsevier Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/150532
ISSN
2015 Impact Factor: 3.769
2015 SCImago Journal Rankings: 3.905
ISI Accession Number ID
Funding AgencyGrant Number
Research Committee of the Hong Kong Polytechnic UniversityG-YX1V
National Natural Science Foundation of China70971045
Research Foundation for the Author of National Excellent Doctoral Dissertation of PR China200963
University Research Committee of the University of Hong Kong10400582
Hong Kong RGC-PPRPolyU5002-PPR-5
Funding Information:

The authors would like to thank the guest editors and two anonymous referees for their helpful comments and constructive suggestions on an earlier version of the manuscript. The work described in this paper was jointly supported by grants from the Research Committee of the Hong Kong Polytechnic University (Project No. G-YX1V), the National Natural Science Foundation of China (70971045), the Research Foundation for the Author of National Excellent Doctoral Dissertation of PR China (200963), the University Research Committee of the University of Hong Kong (10400582) and Hong Kong RGC-PPR Grant (PolyU5002-PPR-5).

References

 

DC FieldValueLanguage
dc.contributor.authorLi, ZCen_US
dc.contributor.authorLam, WHKen_US
dc.contributor.authorWong, SCen_US
dc.contributor.authorFu, Xen_US
dc.date.accessioned2012-06-26T06:05:31Z-
dc.date.available2012-06-26T06:05:31Z-
dc.date.issued2010en_US
dc.identifier.citationTransportation Research Part B: Methodological, 2010, v. 44 n. 7, p. 886-902en_US
dc.identifier.issn0191-2615en_US
dc.identifier.urihttp://hdl.handle.net/10722/150532-
dc.description.abstractAirlines often encounter two major problems in expanding their international networks: (1) restrictive Air Services Agreements (ASAs) governing airlines' commercial rights, and (2) slot / capacity constraints in foreign hub airports. Government interventions are needed to solve these problems, yet few quantitative models are available to guide the design of related public policies. This paper proposes a new model for optimizing the allocation of additional routes in a liberalizing airline market, in which airport capacity constraints are explicitly considered. The proposed model captures the interactions among three types of agents: (1) a regulator who aims to maximize social welfare by optimizing the allocation of additional routes to competing carriers; (2) airlines competing with flight frequency and airfare; and (3) passengers who minimize their own travel disutility (or equivalently maximize utility) given airlines' services and prices. In the proposed model, the passenger demand elasticity is also explicitly considered. The route allocation model is formulated as a 0-1 integer programming problem, and is solved by a heuristic implicit enumeration approach. The Korean - mainland China - Hong Kong airline market serves as model illustration. The effects of airport slot constraints are examined, and the revealed value (marginal welfare gain) of airport capacity expansion is also calculated, which can potentially serve as a benchmark indicator for the planning of airport investments. © 2009 Elsevier Ltd.en_US
dc.languageengen_US
dc.publisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/trben_US
dc.relation.ispartofTransportation Research Part B: Methodologicalen_US
dc.subject0-1 Integer Programmingen_US
dc.subjectAir Transport Liberalizationen_US
dc.subjectAirline Networken_US
dc.subjectImplicit Enumerationen_US
dc.subjectInvestmenten_US
dc.subjectRoute Allocationen_US
dc.titleOptimal route allocation in a liberalizing airline marketen_US
dc.typeArticleen_US
dc.identifier.emailWong, SC:hhecwsc@hku.hken_US
dc.identifier.authorityWong, SC=rp00191en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1016/j.trb.2009.12.013en_US
dc.identifier.scopuseid_2-s2.0-77955553734en_US
dc.identifier.hkuros170656-
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-77955553734&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume44en_US
dc.identifier.issue7en_US
dc.identifier.spage886en_US
dc.identifier.epage902en_US
dc.identifier.isiWOS:000279455400007-
dc.publisher.placeUnited Kingdomen_US
dc.identifier.scopusauthoridLi, ZC=26643300400en_US
dc.identifier.scopusauthoridLam, WHK=7203022024en_US
dc.identifier.scopusauthoridWong, SC=24323361400en_US
dc.identifier.scopusauthoridFu, X=35264384400en_US
dc.identifier.citeulike6554139-

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