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Optimization Applications

in Airline Industry
Tran, Van Hoai
Faculty of Computer Science & Engineering
HCMC University of Technology
E-mail: hoai@cse.hcmut.edu.vn
Homepage: http://www.cse.hcmut.edu.vn/hoai
Reference
Handbook of Optimization - Optimization Applications in the Airline Industry
G. Zu & J. Yang, Kluwer Academic Publishers, 1998

2012-2013
Tran, Van Hoai

Optimization Applications in Airline Industry

How to measure products in Airlines

timeliness
accuracy
functionality
quality
price

Tran, Van Hoai

Optimization Applications in Airline Industry

How to measure products in Airlines

timeliness
accuracy
functionality
quality
price

Tran, Van Hoai

flexible schedules
on-time flights
safety
satisfactory in-flight services
proper baggage handling
reasonable price
convenient ticket purchases

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources
Active interactions and close dependencies among components

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources
Active interactions and close dependencies among components
Dynamic environment

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources
Active interactions and close dependencies among components
Dynamic environment
Sophisticated customer behaviour

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources
Active interactions and close dependencies among components
Dynamic environment
Sophisticated customer behaviour
Complex operations

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources
Active interactions and close dependencies among components
Dynamic environment
Sophisticated customer behaviour
Complex operations
Real-time and mission criticality of decisions

Tran, Van Hoai

Optimization Applications in Airline Industry

Nature of airline business


Severe competition
to other airlines and transportation vehicles

Large operational scale and scope


Tightly coupled resources
Active interactions and close dependencies among components
Dynamic environment
Sophisticated customer behaviour
Complex operations
Real-time and mission criticality of decisions

Optimization-based decision support systems

Tran, Van Hoai

Optimization Applications in Airline Industry

Other problems

Network design
to find network structure & routes to carry targeted passenger flow
at lowest cost

Tran, Van Hoai

Optimization Applications in Airline Industry

Other problems

Network design
to find network structure & routes to carry targeted passenger flow
at lowest cost

Yield management/Revenue management


to find pricing strategies at the maximum total passenger revenue

Tran, Van Hoai

Optimization Applications in Airline Industry

Other problems

Network design
to find network structure & routes to carry targeted passenger flow
at lowest cost

Yield management/Revenue management


to find pricing strategies at the maximum total passenger revenue

Air traffic flow control


to mitigate capacity (airport) reductions impact on airline
operations

Tran, Van Hoai

Optimization Applications in Airline Industry

Other problems

Network design
to find network structure & routes to carry targeted passenger flow
at lowest cost

Yield management/Revenue management


to find pricing strategies at the maximum total passenger revenue

Air traffic flow control


to mitigate capacity (airport) reductions impact on airline
operations

Irregular operations control


to respond efficiently/effectively to irregularity (e.g., weather)

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning (1)

If flight schedule is fixed Major proportion of costs &revenues


are fixed

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning (1)

If flight schedule is fixed Major proportion of costs &revenues


are fixed

Planning process
1 Create a draft version of schedule
2 Studied by fleet assignments, crew scheduling, aircraft
maintenance, other resource allocations
3 Sent back to planning departments for next version

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning (3)


Factors to be considered
Demand function/associated revenues of each O/D
market
Time-of-the-day, day-of-the-week of planning cycle

Features of routes
distances, restrictions, aircraft characteristics,

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning (3)


Factors to be considered
Demand function/associated revenues of each O/D
market
Time-of-the-day, day-of-the-week of planning cycle

Features of routes
distances, restrictions, aircraft characteristics,

Reality
Use simplified funtions
Provide friendly framework for other processes
Output frequency of service on each route, departure time

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - First problem


Notations
G = (V , E ): network of routes i E
ci : average ticket price on route i
tBi : time needed for route i
tBi : time needed for route i
n: number of seats in plane

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - First problem


Notations
G = (V , E ): network of routes i E
ci : average ticket price on route i
tBi : time needed for route i
tBi : time needed for route i
n: number of seats in plane

Problem statement
To maximize profit

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - First problem


Notations
G = (V , E ): network of routes i E
ci : average ticket price on route i
tBi : time needed for route i
tBi : time needed for route i
n: number of seats in plane

Problem statement
To maximize profit

Where are constraints ?

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - First problem

Limited number of flights on route i

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - First problem

Limited number of flights on route i


Limited number of flying seat-hours

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - First problem

Limited number of flights on route i


Limited number of flying seat-hours
Model
Pk

(1)

ntBi fi S
fi fi ,
i A
fi integers

(2)
(3)
(4)

max
s.t.

i=1 ci fi

Pk

i=1

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - review

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - review

No market consideration

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - review

No market consideration
No flight cost

Tran, Van Hoai

Optimization Applications in Airline Industry

Flight planning - review

No market consideration
No flight cost
...

Tran, Van Hoai

Optimization Applications in Airline Industry

Notations

i: route i
k: number of routes operated by airline p
p: airline to be studied
m: number of competitive carriers
Nij : carrier js frequency on route i
: empirical parameters
i : average number of passengers to take route i
Ci : total cost per flight on route i
T : time interval which passengers express to fly
n: number of seats in plane
tBi : time needed for route i of route set B
ci : average ticket price on route i

Tran, Van Hoai

Optimization Applications in Airline Industry

Objective functions

Tran, Van Hoai

Optimization Applications in Airline Industry

Objective functions
Maximize airline ps total net profit
max Pp =

k
X

[(ci i Nip /

i=1

Tran, Van Hoai

m
X

Nij ) Ci Nip ]

j=1

Optimization Applications in Airline Industry

Objective functions
Maximize airline ps total net profit
max Pp =

k
X

[(ci i Nip /

i=1

m
X

Nij ) Ci Nip ]

j=1

Minimize average scheduled delay


min Sdp =

k
X

[i Nip1 T /(4

i=1

Tran, Van Hoai

m
X

Nij )]

j=1

Optimization Applications in Airline Industry

Objective functions
Maximize airline ps total net profit
max Pp =

k
X

[(ci i Nip /

i=1

m
X

Nij ) Ci Nip ]

j=1

Minimize average scheduled delay


min Sdp =

k
X

[i Nip1 T /(4

m
X

Nij )]

j=1

i=1

Maximize #passengers captured by airline p


max Tp =

m
X
i=1

Tran, Van Hoai

i N
Pm ip
j=1 Nij

Optimization Applications in Airline Industry

Constraints
Not allow to exceed a given frequency Nip
Nip Nip ,

Tran, Van Hoai

i A

Optimization Applications in Airline Industry

Constraints
Not allow to exceed a given frequency Nip
Nip Nip ,

i A

Limited number of seat-hours


k
X

Nip ntBi Sp

i=1

Tran, Van Hoai

Optimization Applications in Airline Industry

Constraints
Not allow to exceed a given frequency Nip
Nip Nip ,

i A

Limited number of seat-hours


k
X

Nip ntBi Sp

i=1

Net profit is nonnegative


Nip1 /

m
X

Nij Ci /(ci i ),

i B

j=1

Tran, Van Hoai

Optimization Applications in Airline Industry

Fleet assignment

Next week

Tran, Van Hoai

Optimization Applications in Airline Industry