The global airline industry (2nd ed.)

539 Pages·2016·12.8 MB·English

by  Belobaba

THE GLOBAL
AIRLINE INDUSTRY
AerospaceSeriesList
TheGlobalAirlineIndustry,SecondEdition Belobaba,OdoniandBarnhart July2015
ModelingtheEffectofDamageinCompositeStructures: Kassapoglou March2015
SimplifiedApproaches
IntroductiontoAircraftAeroelasticityandLoads,2ndEdition WrightandCooper December2014
AircraftAerodynamicDesign:GeometryandOptimization SóbesterandForrester October2014
TheoreticalandComputationalAerodynamics Sengupta September2014
AerospacePropulsion Lee October2013
AircraftFlightDynamicsandControl Durham August2013
CivilAvionicsSystems,2ndEdition Moir,SeabridgeandJukes August2013
ModellingandManagingAirportPerformance Zografos,AndreattaandOdoni July2013
AdvancedAircraftDesign:ConceptualDesign,Analysisand Torenbeek June2013
OptimizationofSubsonicCivilAirplanes
DesignandAnalysisofCompositeStructures:With Kassapoglou April2013
ApplicationstoAerospaceStructures,2ndEdition
AircraftSystemsIntegrationofAir-LaunchedWeapons Rigby April2013
DesignandDevelopmentofAircraftSystems,2ndEdition MoirandSeabridge November2012
UnderstandingAerodynamics:ArguingfromtheRealPhysics McLean November2012
AircraftDesign:ASystemsEngineeringApproach Sadraey October2012
IntroductiontoUAVSystems4e FahlstromandGleason August2012
TheoryofLift:IntroductoryComputationalAerodynamicswith McBain August2012
MATLABandOctave
SenseandAvoidinUAS:ResearchandApplications Angelov April2012
MorphingAerospaceVehiclesandStructures Valasek April2012
GasTurbinePropulsionSystems MacIsaacandLangton July2011
BasicHelicopterAerodynamics,3rdEdition SeddonandNewman July2011
AdvancedControlofAircraft,SpacecraftandRockets Tewari July2011
CooperativePathPlanningofUnmannedAerialVehicles Tsourdosetal November2010
PrinciplesofFlightforPilots Swatton October2010
AirTravelandHealth:ASystemsPerspective Seabridgeetal September2010
DesignandAnalysisofCompositeStructures:Withapplications Kassapoglou September2010
toaerospaceStructures
UnmannedAircraftSystems:UAVSDesign,Developmentand Austin April2010
Deployment
IntroductiontoAntennaPlacement&Installations Macnamara April2010
PrinciplesofFlightSimulation Allerton October2009
AircraftFuelSystems Langtonetal May2009
TheGlobalAirlineIndustry Belobaba April2009
ComputationalModellingandSimulationofAircraftandthe Diston April2009
Environment:Volume1-PlatformKinematicsandSynthetic
Environment
HandbookofSpaceTechnology Ley,WittmannHallmann April2009
AircraftPerformanceTheoryandPracticeforPilots Swatton August2008
AircraftSystems,3rdEdition Moir&Seabridge March2008
IntroductiontoAircraftAeroelasticityAndLoads Wright&Cooper December2007
StabilityandControlofAircraftSystems Langton September2006
MilitaryAvionicsSystems Moir&Seabridge February2006
DesignandDevelopmentofAircraftSystems Moir&Seabridge June2004
AircraftLoadingandStructuralLayout Howe May2004
AircraftDisplaySystems Jukes December2003
CivilAvionicsSystems Moir&Seabridge December2002
THE GLOBAL
AIRLINE INDUSTRY
Second Edition
Editedby
PeterBelobaba
DepartmentofAeronautics&Astronautics,MIT,USA
AmedeoOdoni
DepartmentsofAeronautics&AstronauticsandCivil&EnvironmentalEngineering,
MIT,USA
CynthiaBarnhart
DepartmentofCivil&EnvironmentalEngineering,MIT,USA
Thiseditionfirstpublished2016
2016,JohnWiley&Sons,Ltd
FirstEditionpublishedin2009
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1 2016
Contents
NotesonContributors xiii
ListofContributors xix
SeriesPreface xxi
Acknowledgments xxiii
1 Introduction and Overview 1
Peter P. Belobaba
1.1 Introduction: The Global Airline Industry 1
1.1.1 Deregulation and Liberalization Worldwide 4
1.1.2 Industry Evolution Since 2000 6
1.2 Overview of Chapters 13
References 17
2 The International Institutional and Regulatory Environment 19
Amedeo R. Odoni
2.1 Introduction 19
2.2 Background on the International Regulatory Environment 20
2.2.1 The Chicago Convention 20
2.2.2 Freedoms of the Air 21
2.3 Airline Privatization and International Economic Regulation 24
2.3.1 Airline Privatization 24
2.3.2 Types and Critical Aspects of Air Service Agreements 25
2.3.3 Typical Content of Bilateral and Multilateral ASAs 26
2.3.4 The Unified EU Market and Other Major Developments 29
2.3.5 The Role of Airline Alliances 32
2.4 Airports 33
2.4.1 Restrictions on Airport Access 33
2.4.2 Airport Ownership and Management 36
2.5 Air Traffic Management 39
2.6 Key Organizations and Their Roles 41
2.6.1 International Organizations 41
2.6.2 Organizations in the United States 43
vi Contents
2.7 Summary and Conclusions 45
References 46
3 Overview of Airline Economics, Markets and Demand 47
Peter P. Belobaba
3.1 Airline Terminology and Definitions 47
3.1.1 Basic Airline Profit Equation 49
3.2 Air Transportation Markets 51
3.2.1 Typical Air Passenger Trip 51
3.2.2 Spatial Definitions of Airline Markets 52
3.3 Origin–Destination Market Demand 55
3.3.1 Dichotomy of Airline Demand and Supply 55
3.3.2 Factors Affecting Volume of O–D Demand 57
3.3.3 Quality of Service Factors 57
3.3.4 Total Trip Time and Frequency 58
3.4 Air Travel Demand Models 60
3.4.1 Elasticity of Air Travel Demand 60
3.4.2 Air Travel Demand Segments 62
3.4.3 O–D Market Demand Functions 64
3.5 Airline Competition and Market Share 67
3.5.1 Market Share/Frequency Share Model 67
3.5.2 “S-Curve” Model Formulation 69
3.5.3 Quality of Service Index (QSI) Models 70
3.6 Summary 71
References 72
4 Airline Pricing Theory and Practice 75
Peter P. Belobaba
4.1 Airline Prices and O-D Markets 75
4.1.1 Regulated versus Liberalized Pricing 76
4.1.2 Theoretical Pricing Strategies 77
4.1.3 Price Discrimination versus Product Differentiation 79
4.2 Differential Pricing 79
4.2.1 Market Segmentation 81
4.2.2 Fare Product Restrictions 82
4.2.3 Airline Fare Structures 83
4.3 Recent Trends in Airline Pricing 89
4.3.1 Branded Fare Families 90
4.3.2 Unbundling and Ancillary Revenues 91
4.4 Airline Pricing Strategies 93
4.4.1 Factors Affecting Fare Structure in an O-D Market 93
4.4.2 Competitive Fare Matching 96
References 98
Contents vii
5 Airline Revenue Management 99
Peter P. Belobaba
5.1 Computerized Revenue Management Systems 101
5.2 Flight Overbooking 103
5.3 EMSR Model for Flight Leg Revenue Optimization 108
5.4 Network Revenue Management 112
5.4.1 O-D Control Mechanisms 113
5.4.2 Network RM Optimization Models 118
5.4.3 Revenue Benefits of O-D Control 120
5.5 Revenue Management for Less Restricted Fare Structures 121
5.5.1 Demand Forecasting by Willingness to Pay 122
5.5.2 Marginal Revenue Optimization: Fare Adjustment Theory 123
References 125
6 Airline Operating Costs and Measures of Productivity 127
Peter P. Belobaba
6.1 Airline Cost Categorization 127
6.1.1 Administrative versus Functional Cost Categories 128
6.1.2 Cost Drivers by Functional Category 132
6.2 Operating Expense Comparisons 133
6.2.1 Percentage Breakdown of Operating Expenses 133
6.2.2 Aircraft Operating Cost Comparisons 134
6.2.3 Low-Cost Carriers 140
6.3 Comparisons of Airline Unit Costs 145
6.3.1 Total Operating Costs versus Unit Costs 145
6.3.2 Legacy versus Low-Cost Carrier Unit Costs 148
6.4 Measures of Airline Productivity 153
6.4.1 Aircraft Productivity 153
6.4.2 Labor Productivity 156
References 158
7 The Airline Planning Process 159
Peter P. Belobaba
7.1 Fleet Planning 160
7.1.1 Airline Fleet Decisions 161
7.1.2 Fleet Planning Methods 166
7.2 Route Planning 170
7.2.1 Hub Economics and Network Structure 170
7.2.2 Route Planning and Evaluation 175
7.3 Airline Schedule Development 180
7.3.1 Frequency Planning 181
7.3.2 Timetable Development 182
7.3.3 Fleet Assignment and Aircraft Rotations 185
7.4 The Future: Integrated Airline Planning 186
References 187
viii Contents
8 Airline Schedule Optimization 189
Cynthia Barnhart and Vikrant Vaze
8.1 Schedule Optimization Problems 190
8.2 Fleet Assignment 191
8.2.1 The Fleet Assignment Model 195
8.2.2 Fleet Assignment Solutions/Impacts 198
8.2.3 Extending Basic Fleet Assignment Models 198
8.3 Schedule Design Optimization 203
8.3.1 ModelingtheOptimizationofFlightRetimingandFleetAssignment
Problems 206
8.3.2 Importance of Modeling Competition in Schedule Design 207
8.4 Crew Scheduling 209
8.4.1 The Crew Pairing Problem 210
8.4.2 Crew Scheduling Problem Solutions and Impacts 215
8.5 Aircraft Maintenance Routing and Crew Pairing Optimization 215
8.5.1 Modeling and Solving the Extended Crew Pairing Problem 217
8.5.2 ModelingandSolvingtheRestrictedAircraftMaintenanceRouting
Problem Based on the Solution to the Extended Crew Pairing
Problem 218
8.6 Future Directions for Schedule Optimization 219
References 221
9 Airline Flight Operations 223
Alan H. Midkiff, R. John Hansman, Jr., and Tom G. Reynolds
9.1 Introduction 223
9.2 Regulation and Scheduling 224
9.2.1 General Regulatory Requirements 224
9.2.2 Flight Crew Regulation and Training 224
9.2.3 Flight Crew Scheduling 226
9.3 Flight Crew Activities during a Typical Flight 227
9.3.1 Flight Crew Sign-In 228
9.3.2 Operations/Planning 228
9.3.3 Preflight 233
9.3.4 Predeparture 240
9.3.5 Gate Departure 242
9.3.6 Taxi-Out 243
9.3.7 Takeoff 244
9.3.8 Terminal Area Departure 245
9.3.9 Climb 246
9.3.10 Cruise 247
9.3.11 Descent 250
9.3.12 Terminal Area Arrival 253
9.3.13 Final Approach 254
9.3.14 Landing and Rollout 256
9.3.15 Taxi-In 257